Int'l Tax News

Rumors that the U.S. Tax Cuts and Jobs Actwould mean a Canadian capital exodus have proven unfounded, according to one campaign group. But some tax professionals aren't so sure.

The Dutch government scrapped its 15 percentwithholding tax on dividend distributions from 2020 onward as part of the government's ruling agreement. The boost for foreign shareholders of large multinational corporations thatwould comewith ending the taxwas part of the government's motivationÔøΩbut real estate investment funds are bracing for the impact of the abolition on their profits and the return on investment they have promised their shareholders.

In this article, the author considerswhether changes to the U.S. rules for sourcing income from inventory sales contained in the Tax Cuts and Jobs Act operate as intended in light of existing provisions that take precedence over the revised section and given the rules regarding effectively connected income. She ultimately concludes that, at least until Congress amends the law, foreign persons selling foreign-manufactured inventory into the United States should consider operating through a separate U.S. company rather than a U.S. sales branch.

New Zealand plans to exclude from arbitration any case involving the application of anti-avoidance ruleswhen companies try to avoid having a taxable presence in the country. New Zealand included the reservation for permanent establishment-related caseswhen it ratified the OECD's super-tax treaty, because it overlappedwith changes made to the country's Income Tax Act.

When the Swedish government took the final step in ratifying the OECD's super tax treaty, it made a change to the list of provisions it had agreed toÔøΩa direct response to guidelines from the OECD itself, practitioners said. The Swedish government gave itself the option of preventing tax disputes from moving to arbitrationwhen it's in a disputewith another tax authority that has extended its statute of limitations for cases on a particular type of asset.

In this article, the author analyzes the TCJA, the participation exemption, and how the new taxes created in the U.S. tax reform enacted on December 22, 2017, comply or notwith the single tax principle.

In this two-part report,Shaviroexamines and assesses the three main international provisions in the Tax Cuts and Jobs Act. Part 1 discussed normative frameworks for international tax policy. This part focuses on the base erosion and anti-abusetax, global intangible low-taxed income, and foreign-derived intangible income.

U.K. businesseswill have a chance to raise concernswith officials about the European Union's latest efforts to increase tax transparency ahead of the government introducing the new regulations. In a July 6 policy paper, the U.K.'s tax authority said itwill "set up aworking group" for companies and representative bodies affected by the EU's data-exchange directive.

In this two-part report, Shaviro examines and assesses the three main international provisions in the Tax Cuts and Jobs Act. Part 1 discusses normative frameworks for international tax policy. Part 2will focus on the base erosion and anti-abuse tax, global intangible low-taxed income, and foreign-derived intangible income.

The Brazilian government is aiming to meet the demands of the country's foreign-dominated auto industrywith a new package of tax incentives. The tax regime permits the auto manufacturers to use investments in research and development to generate credits for income taxes and the social contribution on net profit.

The global debate around new taxes on the revenue of digital companies like Facebook Inc. centers on governments' relationswith U.S. President Donald Trump, according to a former senior U.K. official. "There seems to be aworld of saber-rattling at the moment," Edward Troup, the U.K. tax authority's former executive chair, said during a July 9 conference speech in London about governments' stances on enforcing revenue taxes for businesses in the digitalized economy.

U.K. lawmaker Meg Hillier is homing in on tax transparency for global companies as part of herwork as chair of a parliamentary committee that scrutinizes government spending. "I am continuing in myworkwith PACs from around theworld to push for greater tax transparency of multinational companies," Hillier said in a July 5 annual report for the Public Accounts Committee.

Multinationals like Coca-Cola Co. and private equity firms are concerned that a provision in the new tax law could end up changing theway foreign entities thatwere meant to be exempted are taxedÔøΩpotentially putting them in the crosshairs of new U.S. international tax rules. The issue arises from a change in the law thatwill result in more foreign entities being treated as controlled foreign corporations (CFCs).

Aggressive tax schemes that try to limit a foreign company's taxable presence in Australiawill be subject to a low threshold "connection" test between the company and its supply of a product or service to an Australian customer.

Other countries may look to copy the U.S.'s minimum levy on global companies' offshore income in their attempts to refine the taxation of internet-based businesses, according to an OECD official.

Google has publiclywarned about incorrect assumptions on the role of user data in its search engine business amid efforts to impose a new tax on such activity. "When it comes to search engine advertising,which is obviously our core business model, the role of user data in that is vastly overestimated," Andrew Ure, head of trade and economic affairs for Alphabet Inc.'s Google, said July 2.

U.S. multinationals operating in Mexicowill have to bewary of the U.S.'s new 21 percent corporate tax rate triggering Mexico's controlled foreign corporation rules, adding a layer of complexity, tax practitioners told Bloomberg Tax. "The only specific consequence of U.S. tax reform is that passive income in the U.S. is now subject to Mexican CFC rules" now that the U.S. has become a "tax haven" under Mexico's domestic rules, said Rodrigo Gómez Ballina, a partner at Jones Day in Mexico City.

The European Union's plans to impose a new tax on the revenue of internet-based companies like Facebook Inc. and Google Inc. have come under fire from member states' government officials. At a July 2 University of Oxford business tax conference, British, Irish, and German finance department officials cited the range of the European Commission's proposal as an issue for them.

The U.S. Supreme Court's groundbreaking ruling in thewayfair case dealingwith tax from online retailers could spur Canadian governments to start taxing sales of retailerswith no physical presence there.

The Australian tax authority released its administrative policy for a new set of rules for highly leveraged companies, proposed by the Treasury in an effort to ensure that "asset valuations used to justify debt deductions are robust." The rules have yet to be legislated, despite already impacting multinational companies.

Houseways and Means Committee Chairman Kevin Brady (R-Texas) says tax legislation this yearwill clarify international tax issues; and President Donald Trump says hewants to cut the corporate rate.

The U.K. government has cleared theway for scores of its tax treatieswith other countries to change as part of the OECD's project to crack down on tax avoidance among multinational businesses. The U.K. submitted its formal letter of ratification for the project's multilateral instrument (MLI) June 29.

British businesses are disclosing details of their financing structures targeted through a European Union probe into a U.K. tax scheme, shedding light on global companies' offshore planning.

Large companies in Brazil, including multinational subsidiaries, have received a major present from two rulings by the Superior Court of Justice (STJ). Brazil's second highest appeals court ruled that large companieswith tax debts in excess of $270,000 can sign agreementswith the revenue service to pay their debts over a period of 60 months.

In this article, the authors discuss the new foreign-derived intangible income provisions of the Tax Cuts and Jobs Act and reassess the double Irish structure in light of those provisions to determine if it continues to deliver tax savings.

The United Kingdom must make more progress on taxing the digital economy before considering further changes to the broader U.K. tax system, including to business rates, Chancellor of the Exchequer Philip Hammond said.

Historically, U.S. tax law has not required U.S. companies to pay tax on foreign subsidiaries' earnings until remitted by the subsidiary to the parent as a dividend or otherwise. U.S. generally accepted accounting principles have therefore allowed U.S. parent companies to postpone recording deferred tax liabilities (DTLs) on unremitted foreign earnings of their subsidiaries for decades, if the parent companieswere able to show that the earnings of their foreign subsidiarieswould remain invested overseas indefinitely. TheTCJA change this calculus, however, theindefinite investment assertion is far from obsolete.

In this article, the author compares the current situation of Brazil and Mexico and their current tax developments around the OECD BEPS project.

In this article, the author discusses a proposed directive thatwould introduce a digital services tax in the EU. He examines how the 3 percent indirect taxwould operate,what businesses and activitieswould be covered, andwhether the Council of Ministers is likely to approve the directive.

HM Revenue & Customs seems eager to litigate rather than accept reasonable arguments in tax disputes, evenwhen the prospects of success are "less than 50 percent," according to the Chartered Institute of Taxation (CIOT).

EU lawmakers have approved a resolution calling for negotiationswith the United States on a Foreign Account Tax Compliance Act agreement thatwould allow EU "accidental Americans" to easily give up their U.S. citizenship.

Taxing the digital economy has become the hot topic as the taxworld has moved on from baseerosionandprofitshifting and Congress has finally acted on reformingthe U.S.corporate tax system.In this article, Mindy Herzfeld proposes that the topic of how to tax the digital economy is best split into two separate topics.

S&P 500 Index members are gearing up to pay out $124.1 billion in dividends in the coming months, a new quarterly record according to data compiled by Bloomberg.The new highwas ushered in by a lower corporate tax rate and the results of lastweek's Federal Reserve stress tests. Dividend declarations made during the second quarterwere 12 percent higher than in the prior year, two percentage points greater than the increase from 2016 to 2017.

In this article, the author discusses the role of value creation in tax policy and legislation.

In this article, the author questions the concept of taxing incomewhere value is created.

The Netherlands has a reputation problem linked to aggressive tax planning, but it has progressed toward containing base erosion and profit shifting and countering its role as a conduit jurisdiction, a new OECD survey shows.

The OECD has released a discussion draft that provides guidance on the application of updated principles for financial transactions in its 2017 transfer pricing guidelines (TPG).

Washington state voterswill likely decide in Novemberwhether to charge industrial emitters a fee for their carbon pollution, the latest effort yet to pass a carbon-pricing measure to fight climate change.

Section 13301 could affect the lives of millions of Americans.

What does Section 13301 do? It limits the ability of corporations to deduct interest payments from their overall taxes. Previously, companies could take all of their interest payments as a deduction, making financing operations through debt more desirable than through equity. Those days are now over.

Tax havens are first and foremost secrecy havens. Recent events in the United Kingdom confirm this view, as Parliament has taken steps to force fiscal transparency on the British overseas territories through public beneficial ownership registers. The territories are fighting back as though their economic future depends on it. This article explores these developments and askswhether the territories should consider a Brexit of their own.

Denmark has finished overhauling its tax administration in a bid to restore public trust after a tax refund scandal that cost the government billions of Danish kroner and rocked the tax body to its core.

Among five new Large Business and International compliance campaigns announced by the IRS July 2 are two concerning the repatriation of foreign earnings.

Thewhite House, the Trump Treasury Department,and Congressional Republicans have every right to celebrate the sixth-month anniversary of the historic tax cuts enacted in late December. U.S. business investment has been rising smartly and a range of public and private forecasts shows rapid economic growth in the second quarter of this year. And there's more good news as Team Trump shares this burgeoning success storywith friends overseas.

Tax Cuts and Jobs Act ("TCJA") signed into law by President Trump on 22 December 2017 contains multiple provisions that significantly impact Europe and theway European corporations are being taxed by the US. The US corporate tax rate is set to be 21% (reduced from 35%). Most importantly, the shift towards participation exemption and the adoption of the base erosion anti-abuse tax ("BEAT"), the global intangible low-taxed income ("GILTI") and the foreign-derived intangible income ("FDII") changed the delicate balance of US-EU taxation. Nonetheless, TCJA should not be considered as a 'taxwar': it is a long-overdue response to the BEPS by the US and a correct application of the single tax principle to prevent double non-taxation.

In this article, the authors discuss the new definition of permanent establishment included in Argentina's recent tax reforms.

The OECD on June 28 launched a database containing detailed, comparable tax revenue information for 80 countries to help policymakers develop and implement tax policy reforms.The Global Revenue Statistics Database, launched at the fifth plenary meeting of the OECD's Inclusive Framework on Base Erosion and Profit Shifting in Lima, is the largest available public source of comparable tax revenue data, according to an OECD release. The database includes country-specific indicators on tax levels and structures and is intended to help users meet the U.N.'s Sustainable Development Goals and the Addis Ababa Action Agenda by supporting global efforts to raise domestic revenues.

After failing to muster parliamentary support to cut corporate tax rates, Australia's ruling coalition has postponed a vote on the controversial measure until after by-elections scheduled for July 28.

Nationswill soon have a new tool to combat tax avoidance, but some tax professionalsworry that authoritieswill take advantage of its ambiguities to challenge some of multinational companies' favorite business structures.

Poland intends to push beyond the EU's new tax transparency rules by requiring tax advisers and other intermediaries to report both cross-border and domestic tax-planning arrangements that are potentially aggressive.

Multinational companies shouldn't stop documenting their loans even though the IRS is proposing to drop complex requirements for such documentation under debt-equity rules, tax practitioners told Bloomberg Tax.