Amazon’s Win in $303 Million Tax Fight With EU

By Hamza Ali and Isabel Gottlieb

Amazon.com Inc. has won the latest stage in a legal battle with the EU over whether it was given 250 million euros ($303 million) of illegal subsidies by the Luxembourg authorities through a tax ruling. Wednesday’s judgment—issued by the European Union’s second-highest court—is another loss for the European Commission’s years-long effort to clamp down on past transfer pricing practices—how companies value intercompany transfers— multinational companies have used in Europe.

The Robotic Revolution: A Tax Policy Collision Course

By Kathryn Kisska-Schulze and Rodney P. Mock 

Media projections depict that robotics, process automation, and artificial intelligence threaten human workforce sustainability. Two oft cited studies forecast that technological innovation could jeopardize more than one third of the U.S. workforce. Nevertheless, the author concludes that Congress should not impose a robot tax. This Article is the first to conduct a significant literature review of the current proposals to tax robots, ultimately taking a contrarian view. It examines mankind’s historical connection to labor amid fears of automation substitution and proposes that implementing fear based tax policy based on job displacement projections is unsound 

Foreign Tax Credit ‘Haircut’ Maintained Under Biden GILTI Reforms

By: Wesley Elmore

The Biden administration’s proposed reforms of the global intangible low-taxed income provisions retain the 20 percent foreign tax credit “haircut” that exists under current law, according to a top Treasury official. The administration’s GILTI proposals build on the current structure, including that haircut, Kimberly Clausing, Treasury deputy assistant secretary for tax analysis, said May 13.

Ireland Must Build on Nontax Features to Curb Tax Hit, IMF Says

By: Stephanie Soong Johnston

Ireland should continue building on its nontax advantages to mitigate the effect of potential global corporate tax reforms on the Irish corporate tax base, according to a new IMF report. In its staff concluding statement of the 2021 Article IV mission to Ireland, published May 12, the IMF said that Ireland was in a good position for an economic recovery in 2021, thanks to strong multinational enterprise growth during 2020.

Luxembourg Gets Resounding Win in Amazon State Aid Decision

By: Ryan Finley

The EU General Court has annulled the European Commission’s 2017 ruling that advance pricing agreements approved by Luxembourg granted Amazon €250 million in state aid, holding that the commission’s transfer pricing analysis was fundamentally flawed. In its May 12 judgment in Luxembourg v. Commission, Cases T-816/17 and T-318/18, the General Court held that the commission’s 2017 ruling on an APA granted to Amazon group members in 2003 and renewed in 2011 was based on a flawed transfer pricing analysis. According to the commission, the APAs’ generous terms conferred €250 million in selective state aid that Luxembourg was required to recover from Amazon.

ATAF Urges Rework of OECD Global Tax Reform Plan

By: Stephanie Soong Johnston

African tax administrators want further changes to part of the OECD’s global tax reform plan, including the allocation of total — instead of residual — multinational profits to market jurisdictions to be taxed under proposed new rules. The African Tax Administration Forum (ATAF) announced in a May 12 statement that it had sent a proposal to the OECD inclusive framework on base erosion and profit shifting that would simplify pillar 1 of the two-pillar plan that its members are negotiating.

Inheritance Taxes Could Revive Government Coffers, OECD Says

By: Stephanie Soong Johnston

The time may be right for countries to consider adopting or reforming inheritance tax policies to help shore up government revenues and better address wealth inequalities in their post pandemic economies, a new OECD report says. The report, published May 11, examines and compares inheritance, estate, and gift taxes across the 37 OECD countries; considers their designs; evaluates the need for inheritance taxation; and outlines reform options that governments may consider adopting to improve their regimes.

Groups Urge U.S. to Drop Tariffs on COVID-Hit India Over DST

By: Stephanie Soong Johnston

The United States should hold off on tariffs on Indian imports, including shrimp and jewelry, in response to India’s digital tax, especially amid the economic devastation caused by the COVID-19 pandemic, stakeholders said. Manab Majumdar of the Federation of Indian Chambers of Commerce and Industry said May 10 that proposed U.S. tariffs on 40 products from India in retaliation against India’s equalization levy would be “inimical to the vibrant trade relations” between both countries, citing “formidable challenges” arising from the coronavirus crisis.

The Evolution of the U.N. Tax Model — Software Payments as Royalties

By: Nana Ama Sarfo

After 10 years of on and off discussions, a much-debated U.N. Tax Committee proposal on treating software payments as royalties is still unresolved. But some of the U.N.’s recent treaty modifications, combined with a spate of global litigation, could give the issue a much-needed nudge toward resolution.

UK withholds backing for Biden’s global business tax plan

By: George Parker, Chris Giles, Emma Agyemang and Jim Pickard

Rishi Sunak is holding back support for Joe Biden’s plans for a 21 per cent minimum global business tax rate, as Britain pushes the US to ensure any agreement includes a fairer system for taxing digital technology giants.

The chancellor, who chairs the G7 finance ministers, said he would consider a global minimum levy only as part of a broader package, with Treasury officials fearing Biden is intent on compelling tech firms to pay tax “in California when it ought to be paid in the UK”.