Int'l Tax News

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House Republicans Ask Lew to Slow Debt-Equity Rules

Houseways and Means Committee Republicans asked Treasury Secretary Jacob J. Lew to slow down finalization of earnings-stripping regulations that have generated consternation among multinational corporations and some on Capitol Hill.

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Large Companies Claimed Most U.K. Patent Box Benefits in Fiscal 2014

More than 95 percent of the nearly £343 million in tax benefits claimed during the first year of the U.K.'s patent box schemewent to large companies, according to a report by HM Revenue & Customs.

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Tax Policy Rising to Prominence in R&D Incentives, OECD Says

Tax policy is becoming increasingly important among incentives meant to encourage research and development and innovative growth in countries, but governments must be careful in designing such policies to ensure they do not have any unintended harmful consequences, such as the creation of arbitrage opportunities, according to a new OECD report.

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MEPs Underwhelmed by Tax Reform Content of State of EU Speech

Tax reform didn't receive enough attention in European Commission President Jean-Claude Juncker's State of the Union Address 2016wTD 179-17: News Releases delivered September 14, according to members of the European Parliament (MEPs) from various political groups.

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Apple Ruling Is EU Power Grab, U.K. and Irish MEPs Argue

Although the European Commission's recent Apple decision received strong support overall, several members of the European Parliament (MEPs) reiterated claims that it undermines Ireland's tax sovereignty during a September 14 debate.

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U.S. Entities Concerned About Data Protection

U.S. banks and their clients areworried about protecting datawhen more than 100 nations begin exchanging financial information to complywith the OECD's common reporting standard.

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House Republicans Ask Lew to Slow Debt-Equity Rules (1)

Houseways and Means Committee Republicans asked Treasury Secretary Jacob J. Lew to slow down finalization of earnings-stripping regulations that have generated consternation among multinational corporations and some on Capitol Hill.
For the DTR story, gohere. (subscription required)
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Ikea on EU Tax Radar as Vestager Looks Beyond Apple, U.S.

European Union regulatorswho slapped Apple Inc.with a 13 billion-euro ($14.6 billion) tax bill are examining allegations that Ikea dodged at least 1 billion euros in taxes over the past six years.
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News Analysis: BEPS Failure and Multilateral Initiatives

In a September 13 speech in Toronto titled "Making Globalizationwork for All," IMF Managing Director Christine Lagarde urgedwestern governments to take better care of their citizenswhile denouncing "tax systems that allow multinational companies andwealthy individuals not to paywhat manywould consider a fair share." But as the populist rebellion against globalization, the European Union, and multinational greed is finally sinking inwith the European elite, their American counterparts demonstrated that they are only just beginning to get it.

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Without A Deft Touch, Treasury Risks Writing Inversion Rules That Benefit Wall Street

by Carter Dougherty (Inside Sources)
In the murky and arcaneworld of tax law, unintended consequences are not hard to come by. In the case of the Treasury Department's years-long battle to fight international tax avoidance, the newest one may be that rules aimed at industrial corporations end up benefiting large banks onwall Street and elsewhere in theworld.
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London Business School Review

Forbes

by Catherine Magelssen and Ioannis Ioannou
The issue of corporate tax avoidance is often discussed in relative isolation,without really considering the efficiency and effectiveness those funds are used by governments or by the tax avoiding corporates.what "fair taxation" is, of course, maywell be a philosophical discussion. Yet the recent EU decision about Apple's tax ruling raises a number of questions that, in our view, have ramificationswell beyond the domain of tax avoidance and competitiveness.
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An unabashed EU cash grab

by Alexander Hendrie (Thewashington Post)
Despite the protests of both country and company, the European Commission has declared Apple's Irish tax rates constitute "illegal state aid," and are telling the company they must pay the Irish government 13 billion euros (about $14.5 billion) plus interest. EU bureaucrats do not allege that Apple dodged taxes, but rather they did not pay enough, a decision that upends the established international tax system by opening the door to retroactive taxation based on subjective accusations of "fairness."
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The Apple ruling aims at the wrong problem

  • By Live Mint

In 2014, Apple's effective corporate tax ratewas allegedly 0.005%. That is one of the eye-catching figures European Union competition commissioner Margrethe Vestager ledwith lastweekwhile declaring the findings of a three-year inquiry into Apple's tax arrangements in Ireland. Here's another: the European Commission (EC) has charged Irelandwith recovering $14.5 billion from the tech giant. Together, they sum up the problemswith the rulingÔøΩa blinkered view of a situation fraughtwith ambiguities and an approach that could prove counterproductive in tackling a legitimate problem.

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The Real Motivation Behind the EUs Attack on Ireland and Apple

Here's a name to conjurewith: Margrethe Vestager. Ring a bellwith you? An old girlfriend from your backpacking days around Europe maybe? Or Emmanuelle's best friend in the 1970s "sophisticated" series of sex movies perhaps? No? Nothing else come to mind? Okay, I'll give you a clue. She's Danish and she's just told the Apple Corporation to pay the Irish government $13 billion in back taxes that Ireland says Apple doesn't owe.
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Understanding the European Commissions Recent Tax Rulings

On August 30th the EC announced that two of Apple's tax agreementswith Ireland violated the state aid clause in the Treaty on the Functioning of the European Union (TFEU), a clause guarding against states giving an advantage to a particular business or industry. This ruling set off a firestorm of criticism for recent EC rulings that have used the state aid clause to strike down tax agreements and force collection of back taxeswith interest.

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Treasury Secretary Jack Lew on Apple's tax bill and the next financial downturn

It's been eight years since the financial crisis and the U.S. economy is still in recovery mode, though it may be the envy of Europe, China, and other countries around theworld.
Earlier this year, Treasury Secretary Jack Lew spoke to us about America's role in theworld economy and tax inversions.
We caught upwith him again to discuss our country's economic health.

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UK stuns with support for Bill requiring public country-by-country reporting

In a surprising volte face, Britain is considering becoming the first country in theworld to force companies to publicly reveal how much tax they pay andwhere they earn the money. The about-face comes after the UK defeated a similar amendment amidst Brexit fears.

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Congressional Pressure Mounting on U.S. Treasury's Debt-Equity Regs

The U.S. Senate Finance Committee should hold a hearing on Treasury's proposed debt-equity regulations, a Republican committee member told Chair Orrin G. Hatch, R-Utah, in a September 13 letter provided to Tax Analysts.

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IRS Transfer Pricing Enforcement Leads to Litigation-Like Audits

The recent mandate of the IRS Large Business and International Division's transfer pricing practice (TPP) to identify, develop, and litigate additional transfer pricing cases has resulted in taxpayers facing more litigation-like techniques during audits, a practitioner said.

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Treasury Official Slams EU's Tax Demands on Apple

A senior Treasury Department attorney slammed the European Commission's landmark decision requiring Apple Inc. to retroactively pay $14.5 billion in unpaid taxes as "a bad precedent that undermines stability in the global tax system."

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Lobbyists: Not Much Relief Coming From Debt-Equity Revisions

Lobbyists don't expect many positive changes for their clients from the Treasury Department's ongoing review of proposed debt-equity regulations.
Despite months of engagementwith Treasury officials and tens of thousands of comment letters, stakeholders said they have largely accepted that the broad scope of the proposed rules under tax code Section 385will remain intact and that there is little hope that Congress can stop them.
For the DTR story, gohere. (subscription required)
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Apple's Ireland Bill Puts U.S. Treasury in Tax Credit Bind

When Apple Inc.was ordered by European regulators to pay $14.5 billion plus interest in back taxes to Ireland, the technology giant seemed to be facing an expensive headache.
Turns out it is a headache for the U.S. Treasury Department aswell.

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G-20 Leaders Ask OECD to Report on Transparency

Bloomberg

by Mark Melnicoe and Angela Greiling Keane
G-20 leaders at the group's summit in Hangzhou, China, asked the OECD to report by June 2017 on tax transparency initiatives and by July to prepare a list of jurisdictions "that have not yet sufficiently progressed toward a satisfactory level of implementation of the agreed international standards on tax transparency."
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Destination-Based Taxation in the House Republican Blueprint

bywei Cui (Tax Notes)
In this article, Cui examines the destination-based cash flow tax in the House Republicans' blueprint for tax reform. He addresses the likely impact of the proposed tax and some of the theoretical controversies that it has generated.
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G-20 Leaders Adopt OECD Tax Transparency Listing Criteria, New Tax Pillar

by Stephanie Soong Johnson (Tax Notes)
In their latest communiqué, G-20 leaders approved the OECD's three objective criteria for identifying jurisdictions that fail to cooperatewith internationally adopted tax transparency standards, and approved a new "tax pillar" focused on promoting inclusive growth and tax certainty.
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India's tax plans steaming ahead as GST Council gets approval

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EU states warm to tax avoidance measures

The EU is accelerating towards stronger legislation on corporate tax in thewake of the European Commission's order to Apple to pay a record-breaking ÔøΩ13 billion of tax in Ireland.
At a meeting in Bratislava, finance ministers appeared to achieve broad consensus and endorsed a European Commission proposal to fight tax avoidance.

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Europes Bite Out of Apple Shows the Need for U.S. Tax Reform

In February Iwrote to European Commission President Jean-Claude Juncker and raised concerns about the commission's state-aid investigations involving the tax practices of U.S. multinational companies.
Most important for U.S. taxpayers, the European Commission's actions also threaten to erode America's corporate tax base.

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MEPs to debate EU Commission verdict on Irelands tax deal with Apple

  • By European Parliament

The EU Commission's conclusion that Ireland granted Apple Inc. illegal tax benefits,which enabled it to pay substantially less tax than other businesses over many yearswill be debated in plenary session onwednesday around 16:00.

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Impact of the proposed Section 385 regulations on companies investing in the United States

  • By PwC
The deductibility of interest on related-party debt for US federal income tax purposes is a vital tax issue for foreign businesses investing in the United States (US inbound companies) because it impacts cost of capital and return on investment.

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Temporary Section 482 Regulations: Is All Value' the Same Thing as Arm's-Length Pricing?

by David Ernick
David Ernick of PricewaterhouseCoopersnext considers the meaning of "value" under temporary transfer pricing regulations (T.D. 9738), andwhether the rules signal a departure from traditional arm's-length principles that have been the foundation of U.S. transfer pricing rules.
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Apple May Face Double Tax on Profits If France Adds to Tab

by Rick Mitchell and Ben Stupples

Apple Inc. may face double taxation on some of its profits if the European Commission's Aug. 30 ruling inspires France to slap its own tax adjustment on the company, practitioners said.
Apple could even face "triple taxation" if it repatriates profits from the European Union to the U.S., Laurent Leclercq, a partner at Paris-based law firm Fidal, told Bloomberg BNA.

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EU's Apple Tax Case Prompted by U.S. Senate Tipoff

by Peter Chapman
The European Union's Apple Inc. tax probe evolved after the U.S. Senate "tipped us off" about the company's practices, according to EU Competition Commissioner Margrethe Vestager.
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Moscovici: Apple Ruling Fair, Not Anti-U.S.'

by Jan Stojaspal
European Tax Commissioner Pierre Moscovici defended the European Union's Apple ruling, saying itwas neither "anti-U.S." nor "arbitrary."
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Finalizing April Inversion Regs Isn't Highest Priority

Because the government's international tax lawyers have their hands fullwrapping upwork on a number of high-priority guidance projects -- not the least ofwhich are the final debt-equity regs -- finalizing the newest inversion regs is not at the top of their to-do list.

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OECD Tax Head Warns Against Departing From Arm's-Length Standard

by Stephanie Soong Johnston
The European Commission has not yet published its full decision in the Apple state aid case, but OECD officials say they are hopeful that the EU executive arm is not deviating from the arm's-length standard.
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Final CFC Partnership Loans Regs May Address Multiple Guarantors

Final regulations addressing the treatment of U.S. property held by controlled foreign corporations in transactions involving partnerships could resolve problems some practitioners havewith a provision described in the preamble of the 2015 proposed regulations, an IRS official hinted.

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News Analysis: Hybrids, PEs, and State Aid

by Mindy Herzfeld
Mindy Herzfeld examines the recent OECD discussion draft on hybrid mismatches for branches and links concepts from the draft to those in the OECD's final action 2 report, U.K. legislation on hybrid mismatches, recent U.S. Treasury announcements, and the European Commission's state aid investigation.
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New CCCTB Proposal to Increase Tax Certainty, EU Official Says

The European Commission's coming proposal to revive the common consolidated corporate tax base (CCCTB)will not only help curb aggressive tax avoidance practices butwill also increase tax certainty for both companies and EU member states, according to a top commission official.

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State Aid Rules a Tool to Achieve Fair Taxation, Vestager Says

by Alexander Lewis
The European Commission does not intend to create a supranational tax authority, but companies should still checkwith the commission to make sure their tax agreements don't fall afoul of the state aid rules, according to EU Competition Commissioner Margrethe Vestager.
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Caterpillar CEO Cites Need for Reasonable Tax Reform'

The chairman and CEO of Caterpillar Inc. likened a recent European Commission decision involving Apple Inc. and Ireland to an act of "piracy" and said it could spark new discussions of how to overhaul the U.S. corporate tax system.

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Europes cash grab from Apple makes corporate tax reform more urgent

  • By Editorial Board
Apple did not remove the headphone jack from its new iPhone 7 as a protest against the European Commission's decision ordering Ireland to charge the U.S. tech company $14.5 billion in back taxes. Still, Apple is mighty aggrieved at the E.C., and it has a point.
For thewashington Post editorial, gohere.
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Treasury to Revise Earnings-Stripping Regulations

by Michael J. Bologna
The Obama administrationwill revise portions of its earnings-stripping proposal on several fronts including cash pooling, foreign-to-foreign loans and the application of the regulations to financial institutions and regulated industries, a senior Treasury Department attorney said.
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Eurogroup head to US: If you want billion-dollar fines to stop, sort out your taxes

The U.S. must sort out its tax regime if theywant to protect their companies from billion-dollar penalties imposed on Apple by the European Union, the head of the euro zone finance ministers group told CNBC.

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Schaeuble Goes Global to Salvage Financial Transaction Tax

After five years of fruitless talks on a European financial-transaction tax, frustrated policy makers including Germany'swolfgang Schaeuble are talking up the prospect of a global levy thatwould make sure banks pay their fair share.

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Ireland Doesnt Want Apples Back Taxes, but the Irish Arent So Sure

When European officials ordered Ireland to collect a record $14.5 billion in back taxes from Apple, Kieran O'Connell drew up awish list for spending the money.
But Ireland doesn'twant Apple's billions. Instead, the Irish government is appealing Europe's tax ruling, a move that is exposing a rift in a country still feeling the aftershocks from years of harsh cutbacks.

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Warren presses for corporate tax changes in wake of Apple ruling

Congress should pass corporate tax changes that require corporations to pay their "fair share" in light of the European Union's ruling that Apple owes Ireland $14.5 billion in back taxes, Sen. Elizabethwarren (D-Mass.) said Thursday.
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State Aid Rules a Tool to Achieve Fair Taxation, Vestager Says

The European Commission does not intend to create a supranational tax authority, but companies should still checkwith the commission to make sure their tax agreements don't fall afoul of the state aid rules, according to EU Competition Commissioner Margrethe Vestager.

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News Analysis: Hybrids, PEs, and State Aid

Mindy Herzfeld examines the recent OECD discussion draft on hybrid mismatches for branches and links concepts from the draft to those in the OECD's final action 2 report, U.K. legislation on hybrid mismatches, recent U.S. Treasury announcements, and the European Commission's state aid investigation.

To read more go here Subscription Required

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OECD Tax Head Warns Against Departing From Arm's-Length Standard

The European Commission has not yet published its full decision in the Apple state aid case, but OECD officials say they are hopeful that the EU executive arm is not deviating from the arm's-length standard.

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