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International Tax News Blog

  • Debt Reclassification or Interest Limits Possible for Inversions

    by Andrew Velarde (Tax Analysts)

    Further guidance on inversions as related to earnings stripping may take the form of either a reduction in the available interest deduction or a reclassification of a debt instrument as equity, a Treasury official said October 29.
    "We're looking at earnings stripping rules. That could either look at whether we would do something to reduce the [interest] deduction similar to [section] 163(j) or . . . maybe we'll do something under section 385 that goes to the character of the instrument as debt versus equity," Brenda Zent, taxation specialist, Treasury Office of International Tax Counsel, said at an event sponsored by the District of Columbia Bar Taxation Section. "We are looking at all those items," she added.
    For the story, go here. (subscription required)

    By Velarde, Andrew , posted on Thursday October 30, 2014
  • The labyrinth of corporate tax reform

    by John W. Diamond (The Hill)

    In the last two decades, there have been sweeping reforms of the corporate income tax in many countries around the world, with many countries lowering corporate income tax rates and broadening the corporate tax base. In addition, several countries, including the U.K. and Japan, have moved from a worldwide (taxing profits of domestic companies both at home and abroad) to a territorial (taxing profits of firms located within its borders) corporate tax system. The United States, however, has not significantly reformed its corporate income tax since the Tax Reform Act of 1986. As a result, given the widespread reductions abroad, the U.S. has the highest corporate income tax rate of all developed countries.

    More recently, a growing number of U.S. companies have considered inverting so that they can more effectively compete with foreign-based companies. This process is referred to as a "corporate inversion," which occurs when a domestic company buys a foreign company and then chooses the foreign location as its new corporate headquarters. The Obama administration recently imposed new rules on firms that invert in an effort to limit the tax benefits of corporate inversions. While these rules may reduce the potential number of inversions, they will also make it more difficult for American firms to compete at home and abroad. These issues underscore the need for Congress and President Obama to tackle corporate tax reform when the next Congress convenes in January.

    For the blog post, go here.

    By Diamond, John W., posted on Thursday October 30, 2014
  • TTC/EY Tax Reform Business Barometer: Views on the Prospects for, and Key Aspects of, Federal Tax Reform

    by Lynda K. Walker, Robert Carroll and M.K. Huffman (Bloomberg Daily Tax Report)

    Lynda K. Walker, Robert Carroll and M.K. Huffman write that The Tax Council/Ernst & Young LLP Tax Reform Business Barometer for October indicates that while business tax professionals don't see enactment of comprehensive tax reform on the horizon in the next year or two, they do think there will be significant foundational work by the Congress over the next year. Respondents assigned a roughly 50 percent likelihood that a new tax reform plan will be released by the chairmen of the House Ways and Means and Senate Finance committees.
    For the story, go here. (subscription required)

    By Walker, Lynda K., Robert Carroll and M.K. Huffman, posted on Wednesday October 29, 2014
  • Promise and Peril in OECD Developing Country Comparables Draft

    by David D. Stewart (Tax Analysts)

    In comments released October 28 on the OECD's Transfer Pricing Comparability Data and Developing Countries discussion draft, practitioners and businesses praised efforts to expand comparability data available to developing countries but argued that simplified administration should not undermine transparency or arm's-length outcomes.
    For the story, go here. (subscription required)

    By Stewart, David D., posted on Wednesday October 29, 2014
  • EU Transaction Tax Bid Falters on Revenue Disagreement

    by Rebecca Christie (Bloomberg)

    The European Union must figure out how to handle revenues from a proposed financial-transaction tax to meet a year-end deadline for moving ahead with the levy in participating nations.

    Ten nations pledged in May to seek agreement on a “progressive” tax on equities and “some derivatives” by the end of 2014, with implementation planned for a year later. As that deadline approaches, nations have found broad agreement on how to handle equities, according to an Oct. 27 planning document obtained by Bloomberg News.

    For the story, go here.

    By Christie, Rebecca , posted on Wednesday October 29, 2014
  • Major new steps to boost international cooperation against tax evasion: Governments commit to implement automatic exchange of information beginning 2017

    by OECD

    The new OECD/G20 standard on automatic exchange of information was endorsed today by all OECD and G20 countries as well as major financial centres participating in the  annual  meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Berlin. A status report on committed and not committed jurisdictions  will be presented to G20 leaders during their annual summit in Brisbane, Australia on November 15-16.
    For the OECD release, go here.

    By OECD, posted on Wednesday October 29, 2014
  • Treasury Considering Ways to Limit Earnings Stripping as Inversions Work Moves Ahead

    by Alison Bennett (Bloomberg Daily Tax Report)

    The government is considering several possible ways to limit earnings stripping, a Treasury Department official said.
    Brenda Zent, a taxation specialist in Treasury's Office of the International Tax Counsel, said Oct. 29 talks are ongoing as officials work on guidance to follow the controversial Notice 2014-52, the department's September guidance intended to curb corporate inversions.
    For the story, go here. (subscription required)

    By Bennett, Alison , posted on Thursday October 30, 2014
  • EU Bid for Financial Transactions Tax Falters on Disagreement Over Revenue

    by Rebecca Christie (Bloomberg Daily Tax Report)

    The European Union must determine how to handle revenue from a proposed financial transactions tax to meet a year-end deadline for moving ahead with the levy in participating nations.
    Ten nations pledged in May to seek agreement on a “progressive” tax on equities and “some derivatives” by the end of 2014, with implementation planned for a year later. As that deadline approaches, nations have found broad agreement on how to handle equities, according to an Oct. 27 planning document obtained by Bloomberg News.
    For the story, go here. (subscription required)

    By Christie, Rebecca , posted on Thursday October 30, 2014
  • AstraZeneca Official, Others Favor Improving Developing Nations' Access to Comparables

    by Kevin A. Bell (Bloomberg Daily Tax Report)

    Reacting to a recent Organization for Economic Cooperation and Development paper on comparability, an AstraZeneca Plc official said his company would welcome the development of comparables databases to cover developing countries, either on a regional or local level.
    Ian Brimicombe, AstraZeneca's vice president of corporate finance, said in a comment letter released by the OECD on Oct. 28: “We note that regional databases in particular would provide a cost-effective way for developing countries to access reliable comparable data.”
    For the story, go here. (subscription required)

    By Bell, Kevin A. , posted on Thursday October 30, 2014
  • Revisiting the Law of Moses' Rod: The Case of Inversions

    by Adam H. Rosenzweig (Tax Analysts)

    This article revisits Marty Ginsburg's law of Moses' rod in the context of inversions, in particular how proposed revisions to the anti-inversion rules could be used to justify new, or even more aggressive, expatriation strategies. While not advocating that any taxpayer or other party pursue specific strategies or that they are "good" from a tax policy standpoint, the goal in examining potential inversion strategies even in the face of anti-inversion rules is to help find ways to incorporate antiabuse provisions into the larger structural goals of the income tax.

    For the article, go here. (subscription required)

    By Rosenzweig, Adam H., posted on Tuesday October 28, 2014