Int'l Tax News

Greek Prime Minister Alexis Tsipras unveiled plans for tax cuts and pledged spending to heal years of painful austerity, less than a month after Greece emerged from a bailout program financed by its EU partners and the IMF. One of the proposed cuts includes a phased reduction of corporate tax to 25% from 29% next year.

Virtual currencies could become a new "virtual tax haven," posing a major risk for governments according to a European Parliament report. The reportwarns that virtual currency poses a "direct challenge" to national sovereignty and may undermine the tax base even though users enjoy the benefits provided by tax revenues.

Moving debt overseas may seem like a good idea for highly leveraged U.S multinationals looking to soften the blow from new TCJA limits on the amount of interest they can deduct from their taxable income. But the financial gymnastics involved in making those corporate deals may not beworth the effortÔøΩespecially as more countries limit the tax advantages of debt.

With President Donald Trump poised to hit Chinawith tariffs on another $200 billion goods, China has announced measures to support some of the exporters targeted. The Ministry of Finance said itwill raise export rebate rates for 397 goods ranging from lubricants to children's books, meaning that firms shipping these products abroadwill pay less value-added tax.

Bain & Co.will set aside millions of dollars in fees from South Africa's tax authority after evidence that its advice on a restructuringwas used to pursue a political vendetta by an ally of the former president, Jacob Zuma.

Under the EU's proposed tax on big Internet companies, Ireland stands to lose revenue as it is the locationwhere many digital companies route their profits. However, France iswilling to considerways to compensate Ireland for possible lost revenue.

Germany's Finance Minister Olaf Scholz has taken a cautious approach to the EU decision to raise levies on large digital firms and advocates the need for a thorough debate on the matter, even though an agreement could be made by the end of the year. A compromise has been proposed by French Finance Minister Bruno Le Maire,whichwould add "a sunset clause" to the European Union tax.

The IRS is launching five new compliance campaigns, including one thatwill focus on large deductions claimed on income tax returns of a foreign corporation, as part of a movement toward issue-based tax examinations.

In a Sep. 4 letter to the IRS, United Airlines Inc. requested the IRS to tell taxpayers how to determinewhether the service of transporting someone between the U.S. and some other country counts as foreign-derived deduction-eligible income,which is used in the calculation of foreign-derived intangible incomeÔøΩofwhich multinationals can take a 37.5% deduction until 2025.

Beijing has back-tracked on a tax hike for high-networth investors after backlash from the fund industry. The reversal is likely a relief towealthy Chinese venture capitalistswho faced as much as a 15% retrospective income tax hike. This action could also signal the government's increasingwillingness to listen to industry opinionswhen setting tax policy.

The EUwill try in the coming month to settle the technical and legal issues threatening the bloc's proposed 3% tax aimed at large Internet companies,with the goal of having a final accord by the end of the year.

In its opinion released on August 16, 2018, the Eighth Circuit remanded the decision of the U.S. Tax Court in Medtronic v. Commissioner,with instructions to the court to make several specific factual findings, including the review of several comparability factors that the appeals court deemed to have been not analyzed sufficiently. This article makes an argument for the appointment of a master in order to perform a proper transfer pricing analysis.

Malta's prime minister is doubling down on the booming blockchain industry in a bid to diversify the European Union's smallest economy.with tax rates as low as 5%, Malta recently passed laws that seek to ease the trading and issuance of cryptocurrencies in order to attract digital companies to set up shop on the island.

South Africa is struggling to meet this year's 1.345 trillion ($89 billion) rand tax collection target as it copeswith the challenge of adopting the OECD's global anti-avoidance reforms, South African Revenue Service Acting Commissioner Mark Kingon said.

Global tax authorities are scrutinizing an estimated $75bn of capital held by the largest US companies, highlighting international regulators' increasingly aggressive approach towards tackling corporate tax avoidance and evasion. Baker McKenzie polled 150 members of the Fortune 500 index of the largest US companies and found that between them, $23bn of revenue is subject to tax disputeswith international authorities.

In this article, the author examines the latest amendments to the EU directive on administrative cooperation, focusing on the new mandatory disclosure rules for tax planning schemes.

Fortune 500 companies are contendingwith billions in tax under dispute, a growth-threatening trend linked to complexity surrounding how corporate value is defined in an increasingly digital economy, according to a new survey.

An interim digital taxwould be difficult to implement in the European Union before the arrival of the OECD's report on taxation of the digital economy in 2020, an OECD adviser told EU lawmakers.

Nikolai Astrup, Norway's minister for international development, and Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, announced September 10 that Norway and the OECD have agreed to provide approximately ÔøΩ4.6 million in financial support over four year so that developing countries can establish effective tax systems.

German Finance Minister Olaf Scholz surprised his European counterparts during their informal meeting by asking for progress on base erosion and profit shifting.

The OECD is aiming for a multilateral consensus on international tax, but there is still disparity in how tax authorities approach the tax treatment of intra-group financial transactions. Some countries are bound to disagreewith the attempts to forge such a consensus. Glenn Price, Vodafone's head of international tax, speaks to ITR about the risks of double taxation in aworldwithout a consensus on how to tax intra-group transactions.

The Bulgarian Ministry of Finance has released for public consultation a draft bill introducing several tax amendmentswhose aim is to bring the domestic regulation in linewith the EU anti-tax-avoidance directive.

This Articlewas prepared for a symposium on 'What's Law Got Do Towith It? Examining the Role of Law in a Changingworld.' The OECD and G20 Base Erosion and Profits (BEPS) project represents the most comprehensive global cooperative effort to date to inhibit aggressive international tax planning and offshore tax evasion ÔøΩ alongwith related revenue losses.

During the annual OECD seminar at the IFA congress, the chairman said "We are at nothing less than in a state of crisis in international tax," referring to the prospect of difficult negotiations over the allocation of taxing rights.

Countries across the globe instituted tax-cutting measures as monetary policy continued to recede as the primary means of economic support during 2017, according to a report released Tuesday by the Organization for Economic Cooperation and Development.

Government of Ireland

This roadmap published by the Government of Ireland lays out specific action plans for implementing the various commitments the country have made through EU Directives, the OECD BEPS reports and the recommendations set out in the Coffey Review, including: Controlled Foreign Company (CFC) Rules; General Anti-Abuse Rule (ATAD Article 6); BEPS MLI; Exit Tax; Interest Limitation Rules; Hybrid Mismatch Rules; Transfer Pricing Rules; Consideration of a Territorial Regime; Mandatory Disclosure Rules; Dispute Resolution; and International Mutual Assistance Bill.

PWC's monthly publication,International Tax News, offers updates and analysis on developments taking place around theworld. This month's publication includes: China's foreign capital regulations; Cyprus's new rule for investment funds; Hong-Kong's proposed changes for qualifying debt instruments, and an ordinance on tax deduction for capital expenditure; Luxemburg's Bill to approve MLI; Mauritius's tax reform in response to OECD's BEPS initiative; The US's proposed rules on 'toll tax', and the final regulation on inversion transactions under Section 7874; EU's guidance for fair taxation; CJEU's annulment of EC decision holding German 'restructuring clause' to be State aid; and statusofUruguay's MLI ratification.

The European Union must push reforms forward before the EU Parliament elections in May, as the post-electoral panorama may make them harder to approve, EU Economic Affairs Commissioner Pierre Moscovici said at an event in Madrid Sept. 6. Such reforms include proposals on a new digital tax and updating the corporate tax system.

The current global rules don'twork for taxing multinational digital business models, and the conversation about how to change them might be emphasizing thewrong question, a Japanese tax official Hayato Furukawasaid. Concerns that digital companies are not paying their fair share of taxes have sparked a fierce debate aboutwhat kind of business activity constitutes taxable presence in a country.

The chief executive of supermarket J Sainsbury has called for U.K. tax reform to ease the burden of business rates, but cautioned that overhauling the controversial property levywill not in itself reverse the decline of traditional high streets.

The new U.S. base erosion tax "looks like a vote of no confidence" in the arm's length principle, the backbone of transfer pricing, a top OECD tax official said. The BEAT provision applies a 10% minimum tax, though the new law overall shows a lack of confidence in principles of transfer pricing.

Recent tax-code changes encouraged U.S. companies to bring home hundreds of billions of dollars in profits held abroad,which companies are returning to shareholders rather than plowing it into expansions, innovation or other forms of investment.

The New York State Bar Association Tax Sectionwants the IRS to go easy on businessesworking to determinewhat portion of income from the goods and services they sell counts as foreign-derived intangible income in a Sept. 4 letter sent to IRS officials.

A European Parliament committee has backed plans for a new value-added tax system aimed at countering cross-border fraud,which costs the bloc 50 billion euros annually. This plan establishes a single taxable supply chain,where goods to be taxed in the member nation inwhich the transport of the goods ends, aswell as call for a dispute resolution mechanism.

Facebook Inc.'s decision to collect domestic value-added and sales tax on advertising sold by its Canadian officeswon't be a sea change for digital companies in the countryÔøΩa move thought to be an attempt to show good corporate citizenship.Other companies may followsuit drawn by the enticement of a positive public image.

In this article, the authors discuss recent U.N. developments in tax policy and compliance.

The U.S. Treasury Department's final rules on foreign currency hedging should clarify the mark-to-market election's effective date and the scope of the expanded business needs exclusion, according to the New York State Bar Association.

In its recently published Engie state aid decision, the European Commission has doubled down on its view that a corporate tax system's objective is always to tax all corporate profit, regardless of its specific provisions.

In this article, the author examines the OECD's recent publication of guidance on the application of the approach to hard-to-value intangibles. He notes his concerns about the approach and the failure of the OECD to consider the comments submitted by practitioners during the consultation period.

Poland's Ministry of Finance released a draft bill proposing preferential tax treatment for income from intellectual property rights, restricted tax breaks under bilateral treaties and domestic law, and lower corporate tax on small and medium-size enterprises. The tax measures are expected to take effect January 1, 2019.

U.S. companies have repatriated billions in offshore cash since the passage of the Tax Cuts and Jobs Act, according to a new analysis that suggests share buybacks are a top use for the repatriated funds.

When a court creates or shapes a general antiavoidance rule, it has a duty to also oversee how a tax administration applies that rule, a French judge said.

That sales of foreign company stock between two U.S. parties can be structured to minimize the seller's global intangible low-taxed income for the transaction year raises policy concerns for the IRS.

Countries are progressing on long-term solutions to tax digitalization,with the United States mulling reforms that may focus on marketing intangibles so more profits are allocated to a market jurisdiction, an OECD official said.

Although the Eighth Circuit's decision remanding Medtronic does not resolve the case, the opinion's emphasis on the need to follow the regulations could have far-reaching effects for this and other major transfer pricing disputes.

Taxpayers that reported provisional amounts in their 2017 financial statements because of the Tax Cuts and Jobs Act (P.L. 115-97) have some flexibility in determining how to treat the myriad Treasury and IRS guidance recently issued.

The Houseways and Means Committeewill meet to consider "tax reform 2.0" legislation theweek of September 10 thatwill make permanent the expiring individual and small business provisions of the 2017 tax law.

A former tax director cannot claim Sarbanes-Oxley protection for insisting on disclosure to the IRS of a potential transfer pricing issue because she couldn't have reasonably thought the company had acted illegally.

The European Commission's package of proposals to tax the digital economy is not an ideal solution but a political answer to growing EU pressures, a top commission official said.

Jones Day has recommended changes to proposed transition tax regulations (REG-104226-18), asserting that the regs have exceeded their intended effect in a few areas, penalizing transactions that are consistentwith congressional purpose or else not relevant to the policies of section 965.