Int'l Tax News

The US tariffs threatened, imposed, deferred, and changed throughout 2025 have created uncertainty for transfer pricing compliance. As multinational enterprises that import affected goods from related companies strive to navigate the changing landscape on material, new tariffs, they face increased costs, affecting not only their profitability but also their transfer pricing compliance. MNEs may be required to lower the transfer price paid to related companies for imported goods to remain within the arm’s length profitability ranges expected by the IRS.

On October 26, the US announced trade agreements with Cambodia and Malaysia and framework agreements with Thailand and Vietnam. Although the agreements primarily impact bilateral trade between these countries and the US, and particularly the rate of customs duties imposed, various provisions and statements focus on other tax issues.

The United Nations’ ongoing efforts to alleviate information asymmetries between taxpayers and tax administrations are worthwhile but face long odds of success.

International tax policy advisers are picking up on the openness to pillar 1 alternatives recently expressed by Spain and Italy and suggested an “ecosystem access compensation” approach.

Mark J. Horowitz, Thomas D. Bettge, Donald C. Hok, and Vesela Grozeva examine the considerations specific to advance pricing agreements that arise when transfer pricing covered by an APA is materially affected by tariffs.

Following litigation over intellectual property transfers and a slowdown in tech sector growth, Israel has issued draft regulations for an improved investment fund tax regime and a notice concerning the taxation of research and development centers.

The arm’s length principle has been the foundation of transfer pricing rules for decades. It says that companies in the same group should price their cross-border transactions as if they were unrelated. However, global businesses today are more interconnected, data-driven, and centered around intangible assets. In this new world, ALP is becoming harder to apply and manage.

Canada’s new budget includes an enhanced research and development tax incentive program, a super deduction for businesses, and tax system integrity measures expected to increase revenues as the government reveals a C $78 billion deficit.

As member states continue to raise concerns about transatlantic tensions, EU countries' finance ministers are scheduled to discuss ongoing negotiations on pillar 2 changes in camera at next week's Economic and Financial Affairs Council meeting.

 A scheduled review of the United States-Mexico-Canada Agreement is shaping up to be the next battleground over digital services taxes in North America.

Lucas de Lima Carvalho examines the memoir of Pascal Saint-Amans regarding his work at the OECD and the book’s implications for a minilateralist compromise.

Bruce Zagaris explores the competition between the United States and China regarding international financial governance, trade, and policy objectives.

Mindy Herzfeld examines international developments around pillar 2 and considers whether the retaliatory taxes under the proposed but not enacted section 899 are still on the table.

An Organization for Economic Cooperation and Development group will explore developing a broader mechanism to help deliver businesses preapproved tax certainty.

Allaying the United States’ pillar 2 concerns is a political necessity for the EU that will require legal creativity to avoid delays and renewed tensions with the Trump administration, according to observers.

Ted Peterson examines past and present U.S. tariffs as well as the economic risks and rewards of a tariff-driven system, noting important distinctions between tariffs used strategically to support industrial development and those used solely as a revenue-generating or punitive measure.

French lawmakers voted to double the country’s tax on large technology companies, risking a backlash from Donald Trump who has long threatened to retaliate against the measure with trade tariffs.

The Trump administration’s recent trade deals with Southeast Asian countries signal its intent to use such deals in place of treaties to combat digital services taxes or similar taxes that it deems to be discriminating against US companies.

The U.N. has released two workstreams that focus on addressing issues related to its framework convention on international tax cooperation and dispute prevention and resolution.

A U.N. panel of national tax administrators has advanced plans to tee up guidance and further studies on a wide array of key tax issues, including the use of artificial intelligence in tax administration.

The U.N. published a concept note regarding the second early protocol to the framework convention on international tax cooperation, which focuses on tax dispute prevention and resolution, explaining that key topics of the protocol design include giving jurisdictions the option to adopt the mechanism or not; a focus on exclusively cross-border tax disputes; allowing application to a wide range of disputes; establishing a legal basis for cross-border administrative cooperation; and making mutual agreement procedures more accessible.

Lee A. Sheppard examines the seemingly doomed fate of the OECD’s BEPS 2.0 project.

An Indonesian Ministry of Finance tax official told a panel he believes “the future of international tax is actually still in pillar 1 because we are now moving to a digital economy” globally.

The French National Assembly’s Finance Committee has approved a proposal to sharply increase the rate and narrow the scope of the country’s controversial digital services tax as part of the 2026 finance bill.

The G7 proposal’s special carveout for the United States from the OECD’s global anti-base-erosion rules threatens to undermine international tax coordination, according to the Italian Parliamentary Budget Office.

Countries that enacted the global minimum tax would be best served giving some of that money back to companies as long as it keeps their tax rate no less than 15%, a report by a think tank affiliated with the Dutch economy ministry said.

Countries are getting closer to finalizing the details on a deal that would exempt US companies from major parts of the 15% global minimum tax.

The OECD’s framework for overhauling the way multinationals are taxed is “dead,” the chair of Ireland’s state-sponsored foreign-direct investment body said.

Nana Ama Sarfo outlines a discussion at the recent IFA Congress in Lisbon about the need for standardization in determining the place of effective management in this era of cross-border remote work.

Much uncertainty remains in worldwide tax with less than a year to go before the first pillar 2 global anti-base-erosion information returns must be filed, a panel said.

Countries are still divided on a number of issues as they renegotiate the global minimum tax agreement, according to Tim Power, chair of the Committee on Fiscal Affairs at the OECD.

EU countries will be able to selectively apply changes to the minimum tax law before revising their domestic law, according to a senior European Commission official.

The European Commission's 2026 work program announced the withdrawal of several tax proposals, including those that would have addressed the debt-equity bias, negotiated a financial transaction tax, and harmonized transfer pricing rules.

Advocacy group BusinessEurope called on the European Commission to show “ambitious leadership” to secure global consensus on pillar 2, extend its safe harbors, and “bring genuine” simplification and investment-friendly tax rules.

The United Nations approved a plan to develop guidance making it easier for developing countries to tax companies without a physical presence within their borders.

The EU should revisit its minimum tax law “to ensure it remains a reasonable and proportionate way forward” for European businesses, said BusinessEurope, a trade association representing Europe’s industry.

Kimberly S. Blanchard responds to a recent letter by Patrick Driessen to clarify her perspective on U.S. foreign tax credits and their relationship to international tax policy.

Mindy Herzfeld considers the One Big Beautiful Bill Act’s changes to key international tax provisions in the Tax Cuts and Jobs Act, highlights areas where pre-TCJA rules no longer make sense, and proposes changes to reduce the rules’ complexity and lower compliance costs to U.S. taxpayers.

Reuven S. Avi-Yonah examines the United States’ reticence to embrace the VAT and argues that its regressivity can be negated.

Mindy Herzfeld considers the One Big Beautiful Bill Act’s changes to key international tax provisions in the Tax Cuts and Jobs Act, highlights areas where pre-TCJA rules no longer make sense, and proposes changes to reduce the rules’ complexity and lower compliance costs to U.S. taxpayers.

G20 members have pledged to advance multilateral talks on an approach to address outstanding concerns about the OECD global minimum tax framework but said its delivery will need to meet certain requirements.

While the EU still generally favors a global agreement on digital taxation, Italian and Spanish officials appeared open to the suggestion of a permanent digital establishment at a recent interparliamentary meeting of the European Parliament.

The OECD base erosion and profit-shifting project has reduced tax avoidance over the past 10 years, but countries will further its progress by simplifying compliance burdens and supporting global minimum taxation, the organization said.

Robert Goulder comments on the Trump administration’s shifting legal basis for tariff authorization.

The United Nations committee for helping developing nations boost tax revenue will decide next week whether wealth taxes, critical minerals, or transfer pricing will figure among the priorities in its new four-year term.

The Group of 20 nations agreed to continue working towards an agreement on the global minimum tax.

Reuven S. Avi-Yonah explores the status of transfer pricing and suggests the United States move to a single-factor formula, with sales of a multinational enterprise into the United States taxed by the United States.

Hafiz Choudhury and Peter Hann examine the legislative history of the U.N. framework convention on international tax cooperation and identify potential obstacles to its implementation.

OECD Secretary-General Mathias Cormann has submitted a report to G20 finance ministers and central bank governors on tax developments in the implementation of pillar 2; tax knowledge inequality and growth; reforms to support global mobility; approaches to environmental taxation; support for developing countries; and transparency.