Int'l Tax News

Italian practitioners expect pillar 2 to generate limited new revenue in higher-tax jurisdictions like Italy, viewing it primarily as a structural backstop against low-tax outcomes rather than a revenue raiser. Commentary highlights compliance burdens, including duplication between GloBE reporting and domestic filings, complex jurisdiction-level ETR calculations, and M&A complications. The OECD’s side-by-side safe harbor is not expected to materially reduce obligations for Italian subsidiaries of U.S.-parented groups because domestic top-up and reporting requirements remain.

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Singapore projects increased corporate tax revenue from the fiscal year 2027 as it implements the OECD pillar 2 regime through an MNE top-up tax and a domestic top-up tax. Officials emphasized that while the 15% minimum rate will boost collections, Singapore must expand targeted incentives to remain competitive in a reshoring environment. The 2026 budget pairs minimum-tax compliance with measures such as a 40% corporate income tax rebate and enhanced internationalization and innovation incentives.

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Poland is consulting on a proposed 3% digital services tax targeting large multinationals with significant global and Polish revenue thresholds. Stakeholders raised concerns about competitiveness, administrative complexity, enforceability, and possible U.S. retaliation, while the finance ministry reportedly remains cautious about alignment with international tax commitments. Inclusion in the government’s legislative agenda will determine whether the DST advances toward parliamentary debate in 2026.

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The authors argue the U.S. refusal to restore a functioning WTO appellate system amid DST disputes is a rational response to asymmetric litigation risk, not hypocrisy. They contend that any U.S. challenge to foreign DSTs could invite counterclaims targeting U.S. tax provisions such as FDII and IC-DISC as prohibited export subsidies, which are easier to attack under WTO doctrine than DSTs. The piece frames DST conflict as a structural tax-trade mismatch, in which U.S. corporate tax incentives may be more legally vulnerable than the DSTs the United States opposes.

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The OECD’s Forum on Harmful Tax Practices released updated peer review findings under BEPS Action 5, assessing preferential regimes and substantial activity requirements. Ireland and Peru were found not to have harmful regimes, while Fiji abolished two incentive regimes, and Anguilla and the Turks and Caicos Islands were flagged for follow-up. The report reflects ongoing multilateral monitoring and pressure to align domestic regimes with substance and transparency standards.

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PwC told Dutch lawmakers that the pillar 2 “side-by-side” safe harbor could prompt multinationals to shift their headquarters, R&D, or other high-value functions out of the Netherlands, thereby threatening the corporate tax base. It urged policymakers to consider competitiveness responses, such as lowering the corporate rate, redesigning innovation box incentives to align with the substance-based safe harbor, or using Article 11 of the EU Pillar 2 directive to opt out of the domestic top-up tax. The warning reflects broader EU tensions between minimum-tax coordination and national competitiveness strategies, as pillar 2 begins to influence location decisions.

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Senate Democrats introduced the Stop Corporate Inversions Act to restrict further transactions that move a company’s tax residence abroad through acquisitions of smaller foreign corporations. The proposal signals renewed appetite to tighten the inversion rules and reinforce §7874-style constraints as part of a broader anti-base-erosion agenda. If enacted, it could narrow viable outbound restructuring paths and increase the tax friction of cross-border M&A involving U.S.-parented groups.

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Rep. Moran’s proposal would deny major federal business tax incentives to companies that use technology controlled by foreign entities of concern, tying tax eligibility to national security and data-risk considerations. The bill would effectively convert credits and incentives into a compliance lever for supply chain and technology governance, potentially affecting planning in manufacturing and tech-heavy sectors. It reflects a broader trend of using tax policy to advance geopolitical and cybersecurity goals, adding another layer of constraints to incentive-driven investment decisions.

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Commissioner Wopke Hoekstra said pillar 2 has “deteriorated” and pillar 1 remains stalled, but he is not ready to push an EU-wide digital services tax and wants to exhaust options to preserve the two-pillar project. He argued that an EU DST would be politically and technically difficult because DST countries would push their existing models, while other member states would demand trade-offs. Hoekstra also defended the Commission’s 2026 withdrawal of several stalled tax proposals (including DEBRA, Unshell, and a transfer pricing directive) while keeping older DST and “significant digital presence” proposals available as leverage.

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African nations face a continued risk of losing revenue to developed countries that apply the global minimum tax despite redesigned rules that feature a carve-out for US multinational companies, a group of the continent’s countries argued.

A large swath of countries pushed back against a proposal that the United Nations play a role in encouraging the exchange of tax information between nations over concerns the move would impose obligations on governments.

The article explains the debate over new U.N. Model article 12AA, which would let countries impose gross withholding tax on cross border services even without a permanent establishment. It cites an ICC commissioned Oxford Economics report warning the rule could reduce services trade and investment and ultimately lower developing country revenues, while supporters say it is a simpler way to expand source country taxing rights in a digital economy. For practitioners, the key issues will be how countries define covered services, set rate caps, coordinate credits, and handle disputes if 12AA is adopted.

To read the document, it be can be read here.

ATAF’s analysis of the Inclusive Framework’s “side-by-side” package argues that the revisions still leave African countries vulnerable to losing residence-based taxing rights under pillar 2. It stresses that without QDMTTs and incentive reform, locally earned income can be absorbed by other countries through the IIR/UTPR or through new side-by-side outcomes. ATAF supports monitoring features but warns that broadened safe harbors and favorable treatment for certain incentives could erode domestic revenue and undermine tax sovereignty goals. 

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The IRS’s final regulations for foreign tax credits for digital taxes cast a broader net than just addressing treatment—they may prevent taxpayers from obtaining foreign tax credits because of artificial intelligence, which enables intellectual property to migrate seamlessly across borders.

A growing number of foreign multinationals are exploring whether to relocate their parent companies to the US, with interest spurred in recent weeks by a deal struck at the OECD exempting American businesses from key parts of the 15% global minimum tax.

Three large banks, Banco Citibank SA, Itaú Unibanco, and Banco Santander Brasil, reportedly paid about BRL 2.4 billion, around $457 million, to settle Brazilian tax disputes, with average discounts of about 21 percent on interest and penalties. The settlements reportedly covered disputes involving Brazil’s former financial transactions tax for Santander and Citibank, and PIS and COFINS-style social contributions plus income tax and the social contribution on net profit for Itaú. The piece shows how Brazil uses settlement programs to close contentious assessments by discounting add-ons such as interest and penalties, and it underscores the real cash costs and compliance risks multinationals face in Brazil’s financial sector.

To read the document, it be can be read here.

Semer argues that the Treasury’s December 15, 2025, final and proposed section 892 regulations would significantly restrict how foreign sovereign investors can invest in the United States while keeping the section 892 exemption. He says the rules could treat routine lending and credit activity, and even standard minority protection governance rights, as disqualifying commercial activity or effective control. The result, he argues, is a policy contradiction where rules meant to police abuse could make sovereign capital harder and more expensive to attract, forcing funds and deal parties to rethink loan terms, veto rights, and compliance planning under section 892.

To read the document, it be can be read here.

An EU Commission official says member states are divided on cross-border remote work, and businesses warn that unclear tax rules are changing hiring and investment decisions across the single market. Companies cite permanent establishment and broader corporate tax exposure as the main problem, with some limiting remote work or hiring to avoid creating nexus through employee presence. The piece frames this as a live administration challenge at the intersection of PE standards, corporate residence, and withholding and payroll compliance, with implications for the EU’s simplification and competitiveness agenda. 

To read the document, it be can be read here.

A global business group said that developing countries would lose hundreds of millions of dollars a year if they adopt a new method of taxing cross-border services endorsed by the United Nations. The International Chamber of Commerce said a report (read the report here) it commissioned found the UN Model Tax Convention’s Article 12AA would lower annual revenue in developing countries by $241 million.

Two Dutch tax practitioners say the Netherlands should apply for the OECD Pillar Two side by side safe harbor, arguing its system is already closed because of the 25.8 percent corporate rate, a domestic top up tax, and strong antiavoidance rules. They frame it as a competitiveness and compliance burden move, warning the Netherlands could face maximum hassle and minimum revenue if it implements Pillar Two without safe harbor protection, especially after the Inclusive Framework’s January 5 deal shielding U.S. groups from IIR and UTPR. They also stress timing, noting the OECD will review regimes on request by the end of the first half of 2026, while Dutch politics have not clearly committed to applying despite parliamentary pressure and potential state aid concerns.

To read the document, it be can be read here.

The OECD’s new “side-by-side” deal exempts US-headquartered multinationals from much of its global minimum tax rules. The UK government has announced that it will implement this deal through new domestic legislation (retroactive to Jan. 1). The EU plans to implement it as well, likely through treating the new safe harbor as consistent with existing exemptions rather than trying to amend the Pillar Two directive that created the minimum tax regime.

More than a half-dozen countries said negotiations over a future United Nations tax treaty need to quickly clarify how the agreement will affect exiting tax treaties as delegates began a new round of talks.

Sheppard argues the OECD’s “side-by-side” safe harbor is an imperfect near-term fix for U.S. multinationals because it does not eliminate QDMTT exposure and may not meaningfully reduce ongoing Pillar 2 compliance. Until countries actually enact and implement the law, U.S. groups may still need to book and compute current IIR/UTPR exposure for financial reporting purposes. The piece also flags structural frictions, including the lack of a QDMTT “push-down” and continued reliance on complex book-income adjustments and elections, suggesting the safe harbors are a band-aid on a flawed framework. 

To read the document, it be can be read here.

Herzfeld argues that even as governments negotiate formal fixes like the Pillar 2 side-by-side safe harbor, many multinationals face opaque foreign audit practices that operate more like “pay-to-play” pressure than predictable rule-of-law enforcement. Herzfeld critiques OECD peer reviews for failing to identify real barriers to MAP and highlights the need for tougher enforcement and penalty tools in jurisdictions such as France, Italy, Mexico, and Australia. Herzfeld suggests responses including enhanced U.S. disclosure of foreign audit activity and a more reality-based peer review that incorporates taxpayer experience. 

To read the document, it be can be read here.

The European Commission opened infringement proceedings against 14 EU member states for failing to fully transpose DAC8 (cryptoasset tax transparency) and/or DAC9 (pillar 2 reporting) by the December 31, 2025 deadline. The action underscores the EU’s growing emphasis on enforcement of tax transparency and global minimum tax reporting as core elements of its anti–tax avoidance agenda. The article focuses on uneven national implementation of pillar 2–related obligations, with potential escalation to the Court of Justice if member states do not respond satisfactorily.

To read the document, it be can be read here.

Busefi writes that Libya largely ignores the usual permanent establishment (PE) concept and instead taxes foreign businesses based on a simple source link. For cross-border service providers and investors, PE planning won’t protect you, and the real risk shifts to withholding, counterparty compliance, and messy treaty conflicts with OECD-style PE rules. Busefi notes Libya has strengthened enforcement by removing limitation periods for unpaid tax recovery, creating an effectively open-ended audit window and signaling a broader drift toward source-based taxation for remote/digital services.

To read the document, it be can be read here.

Examines Turkey’s reduction of its digital services tax rate and considers broader implications for digital tax policy and international coordination.

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Reviews international parliamentary efforts to address multinational tax avoidance and the growing use of protectionist tax measures, examining the Inter-Parliamentary Union’s proposed resolution and its potential role alongside existing global tax coordination initiatives led by the OECD/G20 and the U.N. Tax Committee.

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Discusses how AI-driven tax modeling and new legislation are reshaping tax administration and compliance globally.

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An Amsterdam appeals court ruled that Uber drivers can qualify as entrepreneurs rather than employees, overturning a lower court decision that would have imposed retroactive employment obligations on Uber. The ruling emphasizes individual drivers’ degree of entrepreneurship and leaves enforcement of misclassification rules largely to tax authorities.

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This article explores how technological change, regulatory uncertainty, and enforcement pressures are reshaping global transfer pricing risk heading into 2026.

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Poland says it will draft legislation for a digital services tax of up to 3% aimed at large groups, framing the measure as a competitiveness and “digital sovereignty” response to cross border platform activity that is monetized in Poland but taxed elsewhere. The proposal targets revenues from targeted advertising, multilateral platform intermediation, and monetization of user derived data, while carving out streaming content, communications and payments, and direct online sellers that are not intermediaries. The tax would apply only above both a global size threshold and a Poland revenue threshold, and would be reduced by Polish corporate income tax, which is a design choice meant to blunt double taxation and treaty friction but also raises base definition and crediting questions.  

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Despite the growing complexity of border crossings and regulatory requirements, the need for workforce mobility—and its benefits—remains as vital as ever. Organizations continue to rely on international collaboration and flexible talent exchange as key drivers of growth, innovation, and competitive advantage.

A draft protocol on dispute prevention and resolution under the U.N. tax cooperation framework would focus on resolving cross-border tax disputes between states arising under existing bilateral or multilateral tax treaties, while also exploring optional mechanisms for no-treaty situations, expanded MAP tools, coordinated APAs, and a possible U.N.-led transfer pricing task force. 

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The OECD’s long-awaited side-by-side package is a pragmatic attempt to preserve the global minimum tax architecture while accommodating the unique position of US multinationals. That pragmatism, however, comes with limits.

There is “still willingness from all jurisdictions” at the OECD to restart stalled negotiations for a global tax on digital services, but the talks will likely deviate from the framework’s current construction, according to a senior EU official.

United Nations negotiators working on a new global tax treaty plan to establish a task force to explore and identify practical options for improving countries’ access to transfer pricing information.

A global agreement to exempt US multinationals from key parts of the 15% global minimum tax is raising concerns that its rules may tie the hands of Congress to make corporate-friendly changes to the US tax code in the future.

The OECD’s new “side-by-side” agreement for Pillar Two marks a decisive shift in the global minimum tax project—and not in Canada’s favor.

The OECD’s landmark global minimum tax deal isn’t guaranteed to succeed, according to the UN official leading negotiations on a new international tax convention.

The Japanese government approved changes to its global minimum tax system to implement the OECD’s recently revised agreement.

United Nations negotiators working on new global tax rules issued a draft paper suggesting options for how and when countries can tax cross-border services that result from remote work and digitalization.

See attached the draft for the cross-border “protocol”.

The U.N. released an updated draft framework convention on international tax cooperation that would set principles for sustainable development, fair allocation of taxing rights, measures targeting high-net-worth individual avoidance/evasion, harmful tax practices, and expanded mutual administrative assistance and exchange of information, with protocols contemplated to implement specific rules.

To read the full document, click here