Int'l Tax News

The U.S. corporate tax cutwill reduce tax revenue from multinationals by modest percentages under existing global policies, the IMF says, but if countries respondwith policy changes, the loss could be much greater.

The United States must do more to ensure that the availability of beneficial ownership information fully conforms to new international standards, the OECD's transparency body said in a recent report.

One day after an official denied that the Office of Management and Budget received for review guidance implementing the Tax Cuts and Jobs Act from Treasury, OMB is acknowledging receipt of transition tax regs.

For the first time since 1913, and as part of the 2017 tax reform, Congress adopted a tax regime that exempted from U.S. taxation dividends from foreign subsidiaries. By doing so, Congress abandoned the general principle that U.S. residents should be subject to tax on all income "fromwhatever source derived." This shift marked a good occasion for considering the reasons the United States taxed such dividends in the first place. In 1962, Congress enacted a new law, also known as 'Subpart-F',which subjected certain earnings of foreign subsidiaries of American parent corporations tocurrent-base taxation. Thiswas a deviation from the general tax principle of tax deferral, underwhich earnings of foreign subsidiaries are taxed only upon repatriation of these earnings (by a dividend, for example). The new legislationwas the result of a political compromise.while Treasury supported awide-scale elimination of tax deferral, Congress eventually adopted a much narrower law, eliminating tax deferral only in caseswhere itwas abused by using it to avoid otherwise owed U.S. taxes.

President Trump and Prime Minister Theresa May have agreed to pursue a free trade agreement, hours after the U.K. government defended its Brexit plans following comments Trump made in a newspaper interview.

The Hong Kong government has published the adopted version of a bill implementing OECD base erosion and profit-shifting standards, including an amended treasury center regime and new transfer pricing, profit attribution, and country-by-country reporting rules.

Over the years, tax stakeholders have repeatedly told the OECD that the transactional profit-split transfer pricing method should be used only in cases inwhich it is clearly appropriate, and should not be treated as a default.

Although discussions about how best to tax the digital economy are often so polarized that it sometimes seems difficult to imagine reasonable and consensus-based solutions, signs of progress are beginning to emerge.

In this article, the author discusses the situation of the guidance and regulations required to apply the provisions on TCJA.

An obscure taxprovisionfrom the 1960s thatwas left untouched by President Donald Trump's overhaul could letwealthy individual investors seize for themselves the largest corporate tax cut in U.S. history.

There is some support in the United States for increased tax transparency but little appetite for multilateral initiatives, according to a U.K. House of Commons Public Accounts Committee (PAC) report.

The European Economic and Social Committee (EESC) approved an opinion criticizing the European Commission's digital taxation proposals for threatening smaller EU countries' tax bases and undermining consensus reached during the base erosion and profit-shifting project.

European finance ministers meeting in Brussels July 13 are expected to once again talk about ÔøΩ but not agree on ÔøΩ the VAT reverse-charge mechanism.

The Tax Cuts and Jobs Act (TRA17) signed into law by President Trump on 22 December 2017 contains multiple provisions that incorporate the principles of the OECD/G20 Base Erosion and Profit Shifting (BEPS) into domestic US tax law. Togetherwith the changes in the 2016 US Model Tax Treaty, these provisions mean that the United States is following the European Union in implementing BEPS.This represents a triumph for the G20/OECD and is incongruentwith the generally held view that the United Stateswill never adopt BEPS.

Two economists at the San Francisco branch of the Federal Reservewrote Tuesday that the Republican tax cut signed into law in Decemberwill likely have less of an effect on the economy than forecasters previously thought ÔøΩ and possibly none at all.

Foreign companies need to examine the potential consequences of the USwayfair case as states consider hunting for more tax dollars abroad, say tax advisers.

Value creation iswhere the problems beginwith digital tax. How can you decidewhere the value is created by the England captain'sworld Cup strip? Michael Devereux exploreswhether it is Russia, England or Bangladesh.

Anti-base-erosion provisions in the Tax Cuts and Jobs Act offer few incentives for businesses to locate investment overseas, according to research touted by a panel that counters recent criticism of the law.

Final anti-inversion regs make some modifications to proposed rules, but the IRS is not backing away from most of its earlier guidance, including its controversial serial acquisition rule,which derailed the largest inversion ever.

Stock buyback announcements by US companies smashed records in the second quarter, feeding the debate over how boardrooms are spending theirwindfall from the Republican tax cuts President Donald Trump signed into law in December.

The Trump administration has left Obama-era corporate inversion rules mostly intact, despite business hopes that theywould be eased or revoked.

The authors of the 2017 U.S. tax legislation may have intended the international provisions to allwork as pieces of awholeÔøΩbut that's probably not the interpretation theworld Trade Organizationwould take, legal and trade experts said.

A senior U.K. official has suggested that some of theworld's largest economies could follow the U.S.'s move to slash its corporate tax rate, highlighting the effect of the country's sweeping reforms. "Countrieswill most reflect on the U.S. tax rate cut, particularly thosewith rates distinctly above 26 percent," Mikewilliams, the U.K. Treasury's director for international and business tax, said at a July 9 conference in London.

For the better part of a decade, German authorities say, dozens of banks and brokerages helped investors snatch billions of euros from the national treasury by exploiting an interpretation of the tax code that appeared to let multiple people claim ownership of the same shares of stock andÔøΩcruciallyÔøΩthe right to a refund of taxeswithheld from dividends.

Baker McKenzie has urged Treasury to clarify that several types of payments identified by the firm are not base erosion payments that give rise to base erosion tax benefits; among the types are passthrough payments of third-party items and the issuance of stock in a transaction that qualifies for tax-deferred treatment under sections 351 or 368.

In this article, the author explores the U.S. tax issues facing a hypothetical U.S. corporation and its controlled foreign corporation and disregarded affiliate entities, from the effectively connected rules to the branch rules of subpart F to certain transfer pricing implications.

The French National Assembly (lower house of Parliament) on July 5 approved a bill to ratify the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), according to information published on the French Senate'swebsite.

In the midst of escalating trade tensions and U.S. scrutiny of dealswith China, Chinese bids for U.S. companies have dropped 94.3 percent in value from a high in 2016, according to a new report.

On June 21, 2018, the US Supreme Court decided South Dakota vs.wayfair. It overruled its previous precedents to hold that US states can require remote sellers to collect sales taxwhen they ship items to in-state purchasers. This decision has some implications for the EU's current strugglewith taxing the digital economy, aswell as for the broader international effort to update the international tax rules for the 21st century. Specifically, the decision bolsters the argument for dispensingwith the 19th century permanent establishment concept.

The fifth edition of 'Trends in Tax Transparency', reviewing tax disclosures in the FTSE100, reveals an increase in tax transparency over the last 5 years. A few companies are making innovative disclosures and shaping the debate. Othersare developing a strategic response to the changing tax transparency landscape.

In this article, the author argues that mandatory disclosure is in the best interest of the shareholders of publicly traded multinational enterprises and urges regulators to act quickly as tax authorities begin exchanging reports.

In this article, the author explores the relationship between Brexit and the U.K. tax system.

Dividends distributed by Austrian companies to EU parent companies may under certain conditions benefit from awithholding tax exemption. However, the application of thiswithholding tax exemption may be denied in accordancewith Austrian anti-abuse legislation if the EU parent company does not complywith certain substance requirements.

Rumors that the U.S. Tax Cuts and Jobs Actwould mean a Canadian capital exodus have proven unfounded, according to one campaign group. But some tax professionals aren't so sure.

The Dutch government scrapped its 15 percentwithholding tax on dividend distributions from 2020 onward as part of the government's ruling agreement. The boost for foreign shareholders of large multinational corporations thatwould comewith ending the taxwas part of the government's motivationÔøΩbut real estate investment funds are bracing for the impact of the abolition on their profits and the return on investment they have promised their shareholders.

In this article, the author considerswhether changes to the U.S. rules for sourcing income from inventory sales contained in the Tax Cuts and Jobs Act operate as intended in light of existing provisions that take precedence over the revised section and given the rules regarding effectively connected income. She ultimately concludes that, at least until Congress amends the law, foreign persons selling foreign-manufactured inventory into the United States should consider operating through a separate U.S. company rather than a U.S. sales branch.

New Zealand plans to exclude from arbitration any case involving the application of anti-avoidance ruleswhen companies try to avoid having a taxable presence in the country. New Zealand included the reservation for permanent establishment-related caseswhen it ratified the OECD's super-tax treaty, because it overlappedwith changes made to the country's Income Tax Act.

When the Swedish government took the final step in ratifying the OECD's super tax treaty, it made a change to the list of provisions it had agreed toÔøΩa direct response to guidelines from the OECD itself, practitioners said. The Swedish government gave itself the option of preventing tax disputes from moving to arbitrationwhen it's in a disputewith another tax authority that has extended its statute of limitations for cases on a particular type of asset.

In this article, the author analyzes the TCJA, the participation exemption, and how the new taxes created in the U.S. tax reform enacted on December 22, 2017, comply or notwith the single tax principle.

In this two-part report,Shaviroexamines and assesses the three main international provisions in the Tax Cuts and Jobs Act. Part 1 discussed normative frameworks for international tax policy. This part focuses on the base erosion and anti-abusetax, global intangible low-taxed income, and foreign-derived intangible income.

U.K. businesseswill have a chance to raise concernswith officials about the European Union's latest efforts to increase tax transparency ahead of the government introducing the new regulations. In a July 6 policy paper, the U.K.'s tax authority said itwill "set up aworking group" for companies and representative bodies affected by the EU's data-exchange directive.

In this two-part report, Shaviro examines and assesses the three main international provisions in the Tax Cuts and Jobs Act. Part 1 discusses normative frameworks for international tax policy. Part 2will focus on the base erosion and anti-abuse tax, global intangible low-taxed income, and foreign-derived intangible income.

The Brazilian government is aiming to meet the demands of the country's foreign-dominated auto industrywith a new package of tax incentives. The tax regime permits the auto manufacturers to use investments in research and development to generate credits for income taxes and the social contribution on net profit.

The global debate around new taxes on the revenue of digital companies like Facebook Inc. centers on governments' relationswith U.S. President Donald Trump, according to a former senior U.K. official. "There seems to be aworld of saber-rattling at the moment," Edward Troup, the U.K. tax authority's former executive chair, said during a July 9 conference speech in London about governments' stances on enforcing revenue taxes for businesses in the digitalized economy.

U.K. lawmaker Meg Hillier is homing in on tax transparency for global companies as part of herwork as chair of a parliamentary committee that scrutinizes government spending. "I am continuing in myworkwith PACs from around theworld to push for greater tax transparency of multinational companies," Hillier said in a July 5 annual report for the Public Accounts Committee.

Multinationals like Coca-Cola Co. and private equity firms are concerned that a provision in the new tax law could end up changing theway foreign entities thatwere meant to be exempted are taxedÔøΩpotentially putting them in the crosshairs of new U.S. international tax rules. The issue arises from a change in the law thatwill result in more foreign entities being treated as controlled foreign corporations (CFCs).

Aggressive tax schemes that try to limit a foreign company's taxable presence in Australiawill be subject to a low threshold "connection" test between the company and its supply of a product or service to an Australian customer.

Other countries may look to copy the U.S.'s minimum levy on global companies' offshore income in their attempts to refine the taxation of internet-based businesses, according to an OECD official.

Google has publiclywarned about incorrect assumptions on the role of user data in its search engine business amid efforts to impose a new tax on such activity. "When it comes to search engine advertising,which is obviously our core business model, the role of user data in that is vastly overestimated," Andrew Ure, head of trade and economic affairs for Alphabet Inc.'s Google, said July 2.