Int'l Tax News

Yonah and Wells consider the new corporate alternative minimum tax regime in the United States and argues that the corporate alternative minimum tax enacted as part of the Inflation Reduction Act of 2022 puts the United States in a better position than current law, and arguably even better than would a tax reform package that included a conforming global intangible low-taxed income regime but no book-based corporate minimum tax.

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Following the work of the OECD/G20 Inclusive Framework and the release of its Pillar II administrative guidance, Wardell-Burrus considers this administrative guidance specifically as it relates to the GILTI regime as a CFC tax Regime; the QDMTT which applies before CFC taxes; and the new allocation mechanism of GILTI as a blended CFC Tax. He concludes that the fact that the QDMTT applies before CFC Regimes means that there can be a competitive downside to adopting a QDMTT.

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<p>Amazon is facing pushback from the Luxembourg Tax Authority and a new retroactive Indian tax assessment on cloud services, leading to potential increases in taxes and the use of $2.6 billion in Luxembourg deferred tax assets.</p>
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The US Tax Court ruled in favor of the IRS, allowing them to reallocate income from 3M's Brazilian subsidiary to the US parent company for tax purposes, potentially impacting other multinational companies.

World leaders at the OECD's Inclusive Forum on Carbon Mitigation Approaches agreed on the importance of using a variety of policy levers, such as carbon pricing and emissions trading systems, to address emissions mitigation, while avoiding adverse unintended consequences and considering the implications on national budgets.

House Ways and Means Committee Chair Jason Smith has criticized the Biden administration and the OECD for their proposed undertaxed payments rule, which he believes will target important U.S. tax incentives and benefit Chinese companies, while shifting the tax burden to U.S. workers.

EU leaders have agreed to a narrow easing of state aid rules and the promise of more flexible use of existing funding to counteract the U.S. Inflation Reduction Act (IRA), while Italy has requested a review of the economic governance framework and a European sovereignty fund to support investment in strategic sectors.

The IRS has announced its intent to issue proposed regulations identifying additional listed transactions in the near future, according to Erika Nijenhuis of the Treasury Office of Tax Policy.

Trevor Bowler expands on his previous Whirlpool article, diving again into the interplay of foreign base company sales income code sections and regs in light of the U.S. government’s Supreme Court briefing in the litigation, and the Court’s subsequent denial of cert.

Members of the European Parliament want a levy to be imposed on the financial sector to help finance the EU budget, but what kind of instrument should be introduced is open to discussion.

In Universal Pictures International Spain v. Administración, the Spanish National Court said the tax authorities incorrectly applied the comparable uncontrolled price method instead of the transactional net margin method in a transfer pricing case involving Universal Pictures’ Spanish subsidiary.

The European Commission is asking member states for input on a draft proposal to transform the state aid temporary crisis framework to speed up Europe's green transition and maintain competitiveness with the United States.

The European Commission is planning a consultation regarding the introduction of a digital levy or dedicated fund to ensure that digital content providers do their share to cover the costs of infrastructure and public goods.

The OECD has released much-anticipated administrative guidance addressing key issues under a new global minimum taxation framework, including an allocation formula for U.S. global intangible low-taxed income taxes, domestic minimum tax design, and rule order.

The OECD has published a manual for countries interested in adopting multilateral approaches to mutual agreement procedures and advance pricing agreements, in a bid to improve certainty for taxpayers and tax administrations alike.

Economiesuisse is voting to have Switzerland implement global minimum taxation rules under the OECD-brokered, two-pillar plan for modernizing the international corporation tax architecture for the 21st century. Switzerland is currently debating whether to adopt global minimum tax rules, but the referendum will take place in June.

Austria collected 43 million euros from the tax in 2020 and 80 million in 2021. The government predicts the tax will bring in 120 million euros in 2023, the statement said. Austria's tax went into effect in 2020 and is meant to be "an interim solution until a global consensus is reached," the statement said

The EU is preparing to issue a document on a temporary crisis and transition framework in response to the Green Energy Tax Credits in the IRA. The European Commission will issue a proposal to make the framework "broader and more comprehensive" or to simply "convert" it into a crisis and transition framework. The EU wants to increase the thresholds of their regulation to allow member states more leeway in designing aid that fits their national needs, like, a temporary response to the IRA to boost the sectors of the green transition which are at risk of relocating, in order to lure and retain companies.

On February 2, 2023, the Organisation for Economic Co-operation and Development (OECD) described how the U.S. tax system will interact with the minimum taxes being implemented in other countries. These rules provide U.S. companies with a partial reprieve through 2025. This new guidance spelled out how the existing 10.5% minimum tax on U.S. companies' foreign income interacts with other countries' new taxes. However, other countries will only be so tolerant of the U.S.'s delayed implementation. In addition, U.S. lawmakers are increasingly hesitant about a coordinated global corporate tax increase because of the possibility that such an increase will primarily affect U.S. companies. The United States will need to figure out what can be done to alleviate these concerns before 2025.

The Inflation Reduction Act, signed into law in August 2022, provided tax credits and other support for clean-energy projects. Concerned that these subsidies will draw investment away from Europe, the European Union (EU) wants to provide tax breaks and other aid to clean-tech companies. The EU's proposed response said that state-aid rules could be loosened to make it easier for governments to back new investment in clean-tech production facilities, including through tax breaks.

This Editorial considers the current approach of keeping the unanimity rule for the making of tax legislation in Europe, while at the same time consistently exploring alternative pathways to circumvent it. It argues that this approach is a reflection of the trade-off between (perceived) national tax sovereignty on one hand, and tax efficiency and fairness on the other hand.

The article analyzes strategies that low-income countries and high-income countries might undertake in response to the GloBE rules on the assumption that are indeed implemented by a critical mass of countries.

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Baistrocchi explores Global tax hubs which he describes as the black boxes of the international tax regime. The paper offers the theory of global tax hubs as an intermediation market. It argues that tax hubs are the matchmakers of the international tax regime.

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Heinemann and Stiller analyze the impact of the widely introduced e-invoicing in Italy on cross-border value-added tax fraud. They calculate trade gaps based on product flows on the most detailed level between Italy and the remaining countries of the European Union with results suggesting a significant decline in cross-border fraud in response to the introduction of mandatory e-invoicing, providing an important rationale for the application of this measure by other countries.

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This paper provides a high-level overview of Pillar Two Global Minimum Tax in terms of its policy objectives, technical design and implications for Canada. After teasing out some significant known and unknown challenges, it offers some thoughts on whether, and if so, how and when Canada can proceed with implementation.

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Navarro’s paper is aimed at depicting the rather asymmetrical state of affairs on the access to dispute resolution remedies in instances of tax abuse. It also purports to demonstrate that there are compelling policy reasons to support granting access to both mutual agreement and arbitration procedures in these cases and to criticize the incoherencies that originate from the existing restrictions.

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BRUSSELS - The United States secured a diplomatic victory in Europewhen European Union officials agreed to postpone their proposal for a digital levy that threatened to derail a global effort to crack down on tax havens. The delay removes another potential obstacle to the broader tax agreement,which gained momentum over theweekend after finance ministers from the Group of 20 countries formally backed a new framework. That deal,which officials hope to make final by October,would usher in a global minimum tax of at least 15 percent and allow countries to tax large, profitable companies based onwhere their goods and services are sold. If enacted, the changeswould entail the biggest overhaul of the international tax system in a century.

The article discusses strategies the Biden administration may be considering to get Pillar 1 through Congress in away thatwould not require a 2/3 Senate vote, aswould be required for a tax treaty.

The OECD aims to complete a multilateral convention and model legislation by the end of 2021 or early 2022 so countries can start implementing new rules under a two-pillar global tax reform deal in 2023. During a July 16 OECD podcast, Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, discussed translating the political agreement that more than 130 countries struck in recentweeks into concrete implementation. "The next step is finalizing the political deal in October. There is not much to do, just a few numbers to firm up," Saint-Amans said. "The following stepwill be the implementation to move from a political agreement to legislation."

A key part of a G-20-backed tax reform planwill be a test ofwhether a formulary approach can be used morewidelywhen it comes to multinational profit allocation, a top OECD official said. Grace Perez-Navarro, the OECD's deputy tax chief, highlighted elements of a two-pillar global tax overhaul plan that more than 130 countries had agreed on and G-20 finance ministers recently approved. "This major achievement has been a long time coming," she said July 13 during awebcast organized by the Urban-Brookings Tax Policy Center.

Developing countries must mobilize political power to ensure fair representation in the OECD inclusive framework on base erosion and profit shifting, according to Loganwort, executive director of the African Tax Administration Forum. During a July 9 Tax Justice Network virtual conference, panelists representing the interests of developing countries said they felt that those countrieswere sidelined during OECD negotiations on a two-pillar solution to modernize global corporate tax rules because of a lack of political representation. At a June 30 meeting, 130 of the 139 countries in the OECD inclusive framework on BEPS released a statement agreeing to a two-pillar plan thatwould revise profit allocation rules and tentatively set a global minimum corporate tax rate of 15 percent.

The U.S. governmentwill decidewhat's necessary to push new profit allocation rules through the Senate as part of a G-20-backed global tax reform deal once an implementation plan is finalized, perhaps in early 2022. U.S. Treasury Secretary Janet Yellen confirmed July 11 that Treasury is pushing to include measures to implement pillar 2,which calls for global minimum taxation, of the two-pillar plan in a forthcoming budget resolution and reconciliation package. Shewas speaking during a press conference the day after G-20 finance ministers and central bank governors concluded their July 9-10 meeting in Venice, Italy, under the Italian presidency,where ministers endorsed the plan.

Amazon has notified advertisers that itwill soon apply new fees to their invoices if their ads are served in six countrieswith digital services taxes, including the United Kingdom and France. The company confirmed the change in a July 16 email to Amazon Advertising clients, saying that new "regulatory advertising fees"would start applying September 1. According to a company help page, the new feeswill be included on invoices "when an ad is served in and/orwhen ads are purchased by advertisers in certain countries."

Prominent members of the European Parliament have asked the European Commission not to postpone its digital tax proposal. The commission said on July 12 that it had put on hold itswork on a digital levy proposal in order not to impede the OECD-led negotiations on global tax reforms. The movewaswelcomed by the OECD but criticized by the EP,which had obtained in November 2020 a commitment from the commission to propose a digital levy by June 2021. The commitment, crystallized in an interinstitutional agreement, aimed to secure the reimbursement of the EU's ÔøΩ750 billion coronavirus recovery plan.

The European Commission's decision to postpone its digital levy proposal is a positive development andwill allow countries to finalize the details of a two-pillar global tax reform agreement, according to a top OECD official. "In the end, everyonewill have to play his or her part in the sense that no countrywill do something thatwill be inconsistentwith this global dealwhen it's done," OECD Deputy Secretary-General Masamichi Kono said July 14 during awebcast organized by the Atlantic Council Geoeconomics Center.

U.S. economy chief Janet Yellen had successfully stalled EU plans for a digital levy and told national governments how to run their economies. Yet EU officials had nothing but effusive praise for their American visitor. "We could say that in terms of our relationshipswith the U.S.we have gone from awinter of discontent to a summer of cooperation," Economy Commissioner Paolo Gentiloni told journalists. The European Commission confirmed itwould bow to U.S. demands to put its plans on hold until the fall.

In this paper it is controversially suggested that international tax law is broader than the traditional view of most academics. In addition to domestic laws that cover cross-border transactions and double taxation agreements (or their multilateral counterparts) there is a special consensus international tax law (CITL) based on the institutions, instruments and interpretation implemented by international consensus. This paper exploreswhat is meant by international tax law. Theweight of opinion does not support the view that CIL presently creates any binding tax obligations on States. This paper proposes that there is, however, an emerging system based on common understandings,with the legal duties of cooperation and underpinning expectations of implementationwhich should be recognized as creating obligations upon States even though it does not constitute CIL.

Finance chiefs from the Group of 20 leading economies endorsed an overhaul of the rules for taxing international companies, a landmark achievement of global cooperation after years of tensions. G-20 members have rarely been able to agree to such ambitious changes over the past decade of disputes over trade, investment and jobs, although they didwork together to offset the economic impact of the Covid-19 pandemic. The tax agreement, negotiated earlier this month by 130 countries, has raised hopes that major economies can find common approaches to tackling other global problems, such as climate change and trade.

Finance officials in the Group of 20 (G-20) endorsed "key components" of a framework for an international tax overhaul that is a top priority of the Biden administration. The G-20 finance ministers and central bank governors announced their backing of major elements of the Organization for Economic Cooperation and Development's (OECD) tax framework following a meeting in Venice, Italy. The framework calls for a global minimum tax for corporations of at least 15 percent.

The European Union said that itwould postpone its push for a controversial digital levy to focus on a negotiation over a broader minimum global tax deal struck by theworld's largest economies. The U.S. has lobbied against the levy on digital sales thatwas likely to hit Silicon Valley giants' business in Europe. The EU had pledged to introduce a levy if therewas no progress on a sweeping effort to tax corporations more uniformly. Such a pact now seems more likely after the Group of 20 endorsed the principles of a global-tax agreement.

U.S. Treasury Secretary Janet Yellenwill press European Union officials in Brussels to reconsider their plan to propose a digital levy after securing the Group of Twenty's endorsement for the principles of a global corporate-tax agreement. Yellen is in Brussels following the gathering of G-20 finance ministers and central bankers in Venice,which concludedwith the group's call to finishwork on the global plan's details by October.

Bigger countries are using negotiations on global corporation tax reform to increase their own tax revenue at the expense of smaller nations, Ireland's deputy prime minister said. "This isn't just about tax justice and big companies paying their fair share," Leo Varadkar told reporters in Dublin. "This is also about big countries trying to get a bigger share of the pie."

On July 1, 2021, the OECD-led Inclusive Framework on BEPS announced that 130 countries had agreed on revised outlines of a two-pillar plan calling in part for a reallocation of taxing rights regarding certain large multinational businesses. The author discusses the proposed reallocation in light of the U.S. Trade Representative's recent reports on digital services taxes.

An influential EU panel has suggested using a mechanism designed to combat harmful tax practices to push EU member states into accepting a global minimum tax rate. Over 130 countries have agreed on a global minimum tax rate of "at least 15%" but four EU countriesÔøΩCyprus, Estonia, Hungary, and IrelandÔøΩhave not signed up to the agreement,whichwas negotiated through the Organization for Economic Cooperation and Development.

When the U.S. secured international backing for a global minimum corporate tax, it marked an early victory for Treasury Secretary Janet Yellen as the country's top financial diplomat and paved theway for a key plank of President Biden's domestic agenda. People involved in the negotiations credit Ms. Yellenwith reviving yearslong talks to clamp down on tax avoidance by multinational firms. The breakthrough potentially set the stage for the most sweeping change in international taxation in a century.

The European Union's digital chiefwill meet U.S. Treasury Secretary Janet Yellen as the EU delayed plans for a digital levy after a potential global tax breakthrough. Margrethe Vestager, the EU's executive vice-president for digital issues, is now due to propose a new EU tax on technology companies' revenues on July 20, aweek later than planned, according to a document seen by Bloomberg News.

In a meetingwith Mary Ng, Canada's trade minister, U.S. Trade Representative Katherine Tai urged Canada to abandon its proposed unilateral digital-service tax.

The European Union's plan to propose a new digital-services tax is unlikely to undermine global talks aimed at eliminating such levies, according to the head of the international group spearheading the discussions. "I know for a fact that the European Union is very conscious of the importance of this deal on international tax reform," Mathias Cormann, secretary-general of the Organization for Economic Cooperation and Development, said in a Bloomberg Television interview.

William Horobin and Maria Tadeo

French Finance Minister Bruno Le Maire said he is confident the Group of 20 economieswill back a deal on international tax, even as his country pushes for a higher minimum corporate rate. The G-20 meeting in Venice is poised to give its backing to a deal signed by 131 countries for a minimum corporate levy of "at least 15%," and new rules for dividing up the tax revenues from theworld's largest companies -- particularly U.S. tech giants.