Int'l Tax News

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Australia: Offshore marketing hubs - ATO releases draft discussion paper

  • By PwC
by PwC
On August 10, 2016, the Australian Taxation Office (ATO) released for public comment a 29 page draft discussion paper (DP) that outlines the ATO compliance approach to transfer pricing issues related to centralized operating models or 'hubs'. The focus of the DP is offshore marketing hubs but the ATO plans to issue guidance in relation to other hubs.
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The Potential Tax Effects of Brexit on Investors and Taxpayers in Ireland

Bloomberg

by Louise Kelly and Geraldine McCann
The U.K.'s decision to leave the EUwill inevitably cause a period of great uncertainty for businesses and individuals,write Louise Kelly and Geraldine McCann of Deloitte Ireland. The authors look at potential tax implications for investors and taxpayers in Ireland, particularly for thosewhere there is a close business relationshipwith the U.K.
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Is China's VAT Reform Helping the Economy?

  • By East Asia Forum
by East Asia Forum (Economywatch)
As of 1 May 2016, China has fully replaced its business taxwith a value-added tax (VAT) across all industries in a bid to streamline tax structures and reduce the tax burden.
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Treasury Releases Letter on Debt-Equity Rules Under FOIA

  • By FOIA
The Treasury Department released one outgoing letter under provisions of the Freedom of Information Act, for theweek ending Aug. 14.
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Intangible-Shifting to Foreign Partners Slows: Practitioners

Deals intended to avoid paying tax on appreciated property by shifting the property to overseas partners have slowed since the IRS issued guidance last year denouncing the practice, tax professionals said.
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BEPS Through an Indian Prism

India, as a rapidly growing economic power and member of the G-20 and the OECD, has been assessing the Base Erosion and Profit Shifting Action Plan. Bhavik Timbadia and Ganesh Krishnamurthy of BMR & Associates explore the country's response in detail.
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Apples Tim Cook set to battle for corporate tax reform

by Jennifer Booton (Marketwatch)
Apple Inc. CEO Tim Cook believes U.S. corporate tax reform is imminent, and he's not afraid to flex his muscles as the leader of the nation's most valuable company to make sure it happens.
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Russia's VAT on digital service create short timeframe from compliance

International Tax Review

by Joe Stanley-Smith

Businesses have just five months to prepare for Russia's new VAT rules that impose a tax on e-services from 2017.

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Practitioners: Use Dry Runs' to Work Out Global Tax Reports

Bloomberg

by Alex M. Parker
Companies should prepare a "dry run" to help navigate occasionally ambiguous and unclear information requirements in global tax reports now required by the IRS, practitioners from previous hitPricewaterhouseCoopers LLP said.
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Tougher compliance rules proposed for New Zealand foreign trusts

International Tax Review

by Anjana Haines

New Zealand's government has confirmed that foreign trustswill have to disclose more information to the tax authorities as it gets tough on tax in thewake of the Panama Papers.@

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Lawsuit on IRS Inversion Rules May Be Fascinating' Battle

Bloomberg

by Alison Bennett
The first lawsuit filed against hotly criticized rules to block transactions that move corporations' tax homes overseas to cut U.S. tax bills may face an uphill climb, even as more companies say deals fell apart because of the regulations.
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A World Tax Court: The Solution to Tax Treaty Arbitration

by Jake Heyka
Jake Heyka examines tax treaty arbitration standardswhile demonstrating that as a matter of fundamental justice, arbitration should be revamped; he proposes the creation of aworld tax court.
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Administration Exceeds Its Power With New Inversion Regs

by Diana Furchtgott-Roth
In this column, Furchtgott-Roth discusses the lawsuit brought against the IRS by the U.S. Chamber of Commerce and the Texas Association of Business over the inversion regulations. She concludes that lowering corporate rates is the optimalway to prevent inversions.
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Potential tax implications of Brexit on industrial products and services companies

  • By PwC
by PwC
The implications of the UK public vote to leave the European Union (EU) for the UK, the EU, and the rest of theworld depend to a substantial extent on the agreedwithdrawal terms, aswell as negotiationswith other countries. There are many misconceptions about how the referendum vote impacts taxes, but it causes no major tax legislative changes directly. However, the market volatility thatwe have seen since the vote could affect some tax-related issues. In addition, tax policy changes may, in time, result fromwhat takes place. This insight covers some areas of uncertainty that may impact multinational companies (MNCs) as a result of Brexit.
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Crisis and Deferral: How World Events Influence Subpart F

by Lukewagner
In this article, Lukewagner explains how global events have influenced the evolution of the subpart F regime, and he makes recommendations for future deferral reform.
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News Analysis: Freedom Fries: The House Republicans' Cash Flow Tax

by Lee A. Sheppard
In news analysis, Lee A. Sheppard examines the House Republicans' cash flow tax plan.
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Apple Won't Repatriate Earnings Until There's a 'Fair' Rate

by Andrew Velarde
Apple Inc. CEO Tim Cook indicated in a recent interview that the companywill not repatriate its billions in earnings currently sitting offshore and subject them to U.S. tax until the United States lowers its rate to one that is "fair."
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Subpart F: Revised Active Rents and Royalties Exception

by Lowell D. Yoder
Lowell Yoder of McDermottwill & Emery looks at temporary regulations (T.D. 9733) providing that only activities of a controlled foreign corporation's own employees can be taken into account for active business tests used to determinewhether rents or royalties are Subpart F income. The rules specify that cost-sharing arrangements can't be relied on to satisfy the active business tests, hewrites, but clarify that activities can be conducted in multiple countries.
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Inversions, Corporate Deals Sit Atop IRS Guidance Plan

y Laura Davison
The IRS is prioritizing inversion-related regulations in its annual priority guidance plan,which outlines the agency's goals for published guidance for the coming fiscal year.
The 281 projects on the plan include the controversial rules to curb corporate inversions and the regulations to stop earnings stripping. The 2016-2017 Priority Guidance Plan, issued Aug. 15, said the Internal Revenue Service plans to issue final rules in both areas.
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The high political drama of Obama's Section 385 rules

by Brandon Arnold
The post-convention season is in full swing, meaning that lawmakers are primarily focused on the election. Butwhilewashington is paying attention to political theater, in the realworld Americanworkers and businesses are feeling the economic pain caused by the broken the U.S. tax system.
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Culture, Language Challenge Multinational Audits

by Denise Lugo
Some challenges U.S. audit firms facewhen conducting multinational audits stem from cultural and language differences of a foreign jurisdiction, according to an American Accounting Association panel discussion in New York.
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The IRS must release new guidance on cloud transactions to respond to explosive industry growth and combat base erosion and profit shifting, according to attorneys. It can no longer be said that cl

by Allyson Versprille
The IRS must release new guidance on cloud transactions to respond to explosive industry growth and combat base erosion and profit shifting, according to attorneys.
"It can no longer be said that cloud computing has the mere potential to revolutionize theway consumers and businesses interactwith technology; potential has become a current reality," the American Bar Association Section of Taxation said in a letter to the Internal Revenue Service.
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Proposed Canadian Tax Changes Could Catch U.S. Firms Unaware

by Peter Menyasz
Canada is considering changes to its value-added tax that, if adopted,would expose U.S. limited partnerships to penalties for reporting requirements they likelywouldn't be aware even exist.
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OECD BEPS plan failing to combat tax avoidance, MPs warn

by Sinead Moore
A report by the All Party Parliamentary Group (APPG) on Responsible Tax said that the OECD's BEPS proposalswill not be successful in tackling global tax avoidance until full transparency is introduced into the tax system.
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India Races to Implement Epic Tax Reform

After Indian lawmakers took a decade to agree on the nation's biggest tax reform in modern history, Prime Minister Narendra Modi is racing to get it implemented in less than eight months.
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High-Level IRS Scrutiny in Debt-Equity Cases Raises Concerns

Bloomberg

by Alison Bennett
xpanded IRS scrutiny could make it tougher for companies trying to convince the agency that their deals involve tax-favored debt rather than expensive equity.
The IRS announced July 26 that all debt-equity caseswill have to go to a high level of legal reviewÔøΩa move that might reduce taxpayers' ability to argue individual cases, tax attorneys told Bloomberg BNA.
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Multinationals May Challenge Debt-Equity Rules: Attorneys

Bloomberg

by Alison Bennett
Companies may pursue big legal challenges to the Treasury Department's controversial earnings-stripping rules unless the government makes significant changes, tax attorneys told Bloomberg BNA.
The question is a critical one as the governmentworks to finalize rules intended to keep multinationals from shifting income out of the U.S. via loans to subsidiaries.
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Denmark Issues Detailed Technical Ruling On PE Analysis Applicable to Data Centers

Bloomberg

by Gary D. Sprague
Gary D. Sprague of Baker & McKenzie looks at a new ruling from the Danish tax authority analyzingwhether a data center constitutes a permanent establishment for an affiliated nonresident entity that supplies the digital goods or services to the market. Spraguewrites that the ruling "is the most complete expression in the public domain of the technical reasons"why a data center entity doesn't constitute a PE.
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Luxembourg proposes new corporate tax measures

  • By PwC

PwC

by PWC
The Luxembourg Government on July 26, 2016, introduced a billwith proposed tax measures for corporations (the Bill) for the 2017 tax year. The proposed changes are in linewith the announcements made by the government earlier this year.
Although the Bill has not been finalized, multinational enterprises operating in Luxembourg should start considering how the proposed measures, if enacted, could affect them.
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Tax obligations for China's oil and gas upstream sector

It is absolutely necessary to plan aheadwhen operating in China's oil and gas upstream sector,which allows international oil companies (IOCs) to participate in and operate the exploration development and production of petroleum resources in China.

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Spain: Participation exemption in 'pure holding companies'

The Spanish Corporate Income Tax Law (CIT Law) contains a tax exemption for income obtained by Spanish entities from the transfer of ownership interests in companies,whether resident or non-resident.

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Inversion Rules Lawsuit Shows Need for Tax Overhaul: Brady

by Alison Bennett
Houseways and Means Committee Chairman Kevin Brady (R-Texas) said a new lawsuit against IRS anti-inversion rules shows they hurt companiesÔøΩand demonstrates the need for the tax overhaul Republicans plan to keep pushing.
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What Goes Around Comes Around: Proposed Regulations Treating U.S. Disregarded Entities as Corporations

by Edward Tanenbaum
Edward Tanenbaum of Alston & Birdwrites proposed rules (REG-127199-15) thatwould treat foreign-owned U.S. disregarded entities as corporations for information reporting purposes are an extension of the anti-tax evasion efforts countries have initiated in thewake of the Foreign Account Tax Compliance Act. Among other factors, Tanenbaum says, the rules are "prompted by the need to clean up the U.S.'s reputation as a tax haven."
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Economic Analysis: Difficulties With the House GOP's Business Cash Flow Tax

by Martin A. Sullivan
In economic analysis, Martin A. Sullivan explainswhy a business cash flow tax doesn't prevent all profit shifting and base erosion.
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News Analysis: The FTT -- Revenue Raiser or Social Policy Tool?

byMindy Herzfeld
Mindy Herzfeld outlines global proposals for a financial transaction tax and the arguments for and against the tax, concluding that itwill be difficult to design a good FTT that could be a social policy tool.
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The Poison Pill of BEPS: M&A and Intercompany Financing Transactions

by Jenswittendorff
Jenswittendorff examines the OECD's new transfer pricing rules on risk allocation and the potential consequences if the risk is reallocated from the creditor to another group company.
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Business groups sue IRS over offshore tax rules

by Naomi Jagoda
The U.S. Chamber of Commerce and the Texas Association of Business on Thursday filed a lawsuit challenging Treasury Department and Internal Revenue Service (IRS) rules aimed at curbing offshore tax deals.
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International Tax News - Edition 42

  • By PwC

by PwC

International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are:

  • Poland's draft bills to amend the CIT and PIT laws
  • China's newworking guidelines for the administration and assessment of High and New Technology Enterprises (HNTEs)
  • The new Brazilian CFC rules
  • Retroactive changes to triangular brand rules in the US-Luxembourg treaty
To read more go here

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U.S. Chamber of Commerce Files Suit Challenging Inversion Regs

by Andrew Velarde
The U.S. Chamber of Commerce and the Texas Association of Business filed suit against the IRS and Treasury over their inversion regulations August 4, on the grounds that they violate the Administrative Procedure Act.
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Pfizer Split Not a Quick Tax Fix, Says CEO

by Amanda Anthanaiou
A long-deliberated separation of Pfizer Inc.'s innovative and established products businesses is not a quick route to improving the company's tax situation under present tax law, according to company CEO Ian Read.
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India Unveils Road Map for Epic Tax Overhaul by April 2017

byPradhan, Bidhudayya, Iain Marlow & Madhur Singh
Indian lawmakers took a decade to agree on the nation's biggest tax overhaul in modern history, and Prime Minister Narendra Modi now is racing to put it into place in less than eight months.
"We are going to try to make it reasonably as quick as possible," Finance Minister Arun Jaitley told reporters in New Delhi Aug. 4. "It is always good to set stiff targets and try to meet them, rather than have no targets at all."
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India Passes Landmark Tax Reform in Modis Biggest Win Yet

India's upper house of parliament onwednesday unanimously approved the creation of a national sales tax a decade after the movewas first proposed, the biggest legislative victory for Prime Minister Narendra Modi since he took office in 2014.

The constitutional amendment, one of India's most significant reforms since the 1990s, now has to be endorsed by the Modi-controlled lower house and then ratified by at least half of all states, a process projected to be concluded before the year ends.

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Reform Corporate Taxes; Don't Stop Corporate Inversions

bywaynewinegarden
In this article,winegarden argues that the economic consequences from corporate inversions arewidely misunderstood andwhile not optimal are growth-enhancing, given the costs imposed by the U.S. corporate income tax system.winegarden also discusses how the positive economic benefits from corporate inversions can be understood only by examining the negative consequences of the U.S. corporate income tax code.
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Q&A: What's the Big Deal About India Goods and Services Tax?

by Unni Krishnan
India's decade-longwait for a national sales tax thatwill create one of theworld's biggest single markets is nearly over.
On Aug. 3, lawmakers in the upper house of parliament approved a constitutional amendment to enable the goods-and-services tax, known as GST (see related story in this issue).
Once fully implemented, the taxwill go a longway toward fulfilling Prime Minister Narendra Modi's pledge to make it easier to do business in theworld's fastest-growing economy.
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In a Victory for Modi, India Overhauls Its Tangled Tax System

by Ellen Barry & Hari Kumar
Lawmakers cleared theway onwednesday for India to forge a single economic zone from its thicket of overlapping federal and state taxes, the most important economic measure since India opened its markets in 1991.
Potentially one of the most dynamic economies in the developingworld, India is hampered by a bewildering array of state-by-state tax codes that discourage doing business across state borders.
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India Tax-Overhaul Bill Moves Forward

by Raymond Zhong
After more than a year of gridlock, the upper house of India's Parliament approved a contentious overhaul of the convoluted tax system, an important step in Prime Minister Narendra Modi's campaign to modernize Asia's third-biggest economy.
Lawmakers votedwednesday to replace India's jumble of federal, state and interstate sales taxeswith a nationwide goods-and-services tax, or GST.
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Cash Pooling Exception Underway for Treasury Debt-Equity Rules

by Alison Bennett
The government isworking to carve out "appropriate" cash pooling arrangements in final earnings-stripping rules, a senior Treasury Department official saidÔøΩa move hundreds of multinational companies are carefullywatching.
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Debt-Equity Loan Recast Rule Shaped by Complexity: Treasury

by Alison Bennett
The Treasury Department's decision to call for automatic loan recasts under controversial earnings-stripping ruleswas made in the face of shrinking IRS resources and tough options, a top agency official said.
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No Definitive Time Frame for Debt-Equity Rule Finalization

by Andrew Velarde
The finalization of the debt-equity regs remains a priority for Treasury, but the agency has not set a deadline for completion, a senior Treasury official said August 2.
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Segmented Foreign-Owned Corporate Record Maintenance

by Robert Feinschreiber & Margaret Kent
In this article, Feinschreiber and Kent discuss potential conflicts among the reporting requirements in Treasury regulations and those in action 13 of the OECD's base erosion and profit-shifting project, and explain how those conflicting requirements could create obstacles for a foreign-owned U.S. business, especially if it is a segmented enterprise.
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