Int'l Tax News

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Ireland Economy Grows as U.S. Companies Chase Lower Taxes

by Dara Doyle
Ireland's economy expanded by more than a quarter last year as companies moved their tax address to the island nation.
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OECD Will Review Relevant' Countries' Tax Policy Compliance

by Rick Mitchell
The OECDwill review some economically "relevant" non-member countries for compliancewith minimum standards under the international project against corporate tax avoidanceÔøΩeven if those countries decline to participate.
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EU Council Formally Adopts Antiavoidance Directive

  • By J.P. Finet
by J.P. Finet
The EU Council has adopted the anti-tax-avoidance directive 2016wTD 134-12: EU Council Directives as amended by the council in June.
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Musings on Portfolio Interest Exemption & Economic Substance

by Oscar Grisales-Racini (Tax Notes)
In this article, Grisales-Racini explores the interactions of three concepts: traditional planning and the so-called portfolio interest exemption; the economic substance doctrine in light of its recent codification; and the new global order predicated on substance in cross-border transactions.
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Low Hopes, Heightened Rhetoric on Eve of Debt-Equity Reg Hearing

by Amy S. Elliott (Tax Notes)
The government received about 200 unique comments in response to the proposed debt or equity regulations and 18 requests to speak at the July 14 public hearing, but the continued resolve of Treasury officials to proceedwith the goal of finalizing the regs has led to a rare joining of forces in the tax bar.
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Cash Pooling Exception Likely in Final Debt-Equity Rules: PwC

Bloomberg

by Alison Bennett
The Treasury Department is likely to include some form of exception for cash poolingwhen it finalizes controversial earnings-stripping rules, a PricewaterhouseCoopers LLP tax practitioner said.
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UK plans to cut 20% corporate tax rate

The UK plans to cut the corporation tax rate to the lowest of any major economy to attract businesses and investment post-Brexit, sparking concerns in the European Union that this could give the UK tax-haven status and trigger a 'race to the bottom'.

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EU Parliament votes on fairer taxation measures

The EU is a step closer to introducing an EU-widewithholding tax on company profits leaving the bloc, aswell as several new compliance and tax rules.

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US corporate tax cuts possible under Republicans' tax reform proposals

In a development that could reshape the US tax system, the House Republicans released a long-awaited tax reform blueprint to simplify the country's federal tax structure.

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Consolidating Acquired IP -- A U.S. Inbound Perspective

by Michael Steinsaltz
In this report, Steinsaltz surveys the landscape of partnership and corporate structures available for U.S. inbound companies thatwant to consolidate acquired intellectual property, noting recent tax law changes and options for the future.
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OECD Issues Follow-Up Draft on Limiting Interest Deductibility

Bloomberg

by Alex M. Parker
An OECD discussion draft outlined more details about the formula the organization recommends to cap interest deductibility as part of its effort to combat international tax avoidance.
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EU to Adopt Anti-Tax Avoidance Plan Despite Concerns

European Union finance ministers are set to formally adopt landmark legislation July 12 designed to clamp down on corporate tax evasion by rubber-stamping the Anti-Tax Avoidance Directive (ATAD) that includes measures to limit company interest deductions and impose exit taxation rules.
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Human rights law and the obligation of countries to cooperate on tax matters

by Aldo Caliari
When discussing tax policy a common tendency used to be to treat it as an exclusively domestic policy matter, one towhich only the prerogatives and obligations of the Statewhere the respective taxes are to be collected are relevant. Reality could be nothing further from the truth, as demonstrated by the amounts of revenue that get lost to tax evasion and avoidance by international actors because of their ability to straddle across a diversity of national jurisdictions.
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Rep. DeFazio to Propose Financial Transactions Tax

Bloomberg

by Laura Davison
Rep. Peter DeFazio (D-Ore.) is scheduled to introduce a plan to levy a 0.03 percent tax on most financial trades as he seeks to curb high-frequency trading.
The legislation, set to be introduced July 13, "will discourage risky trading behaviors that put everyday Americans' investments on the line and is expected to collect over $417 billion in revenue in the next decade," according to a July 11 statement from DeFazio's office.
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Treaty Overrides Where the Code's Legislative History Is Silent

Bloomberg

by Thomas S. Bissell
CPA Thomas Bissell considers tax code Section 7852(d)(1) and its effectwhere new revenue laws conflictwith pre-existing tax treaties. Bissell looks at how statements of legislative intent controlÔøΩincluding some made "retroactively"ÔøΩand questions raisedwhen none is apparent.
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OECD announces further developments in BEPS implementation

  • By OECD

Today the OECD has released (i) a discussion draftwhich dealswith the design and operation of the group ratio rule under Action 4 of the BEPS Action Plan, and (ii) standardised IT-format for the exchange of tax rulings (ETR) between jurisdictions – the ETR XML Schema – under BEPS Action 5. The OECD alsowelcomes Angola and the Seychelles as the 83rd and 84th members of the Inclusive Framework on BEPS.

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News Analysis: Will Brexit Unleash a Tax Haven?

by Ajay Gupta
A United Kingdom outside the European Union couldwell seek to counter any resulting loss in London's cachet as the center of international commerce by racing to the bottom on corporate taxes -- slashing the rate and exploiting the newlywon independence from Brussels to offer special one-off arrangements.
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Proposed Debt-Equity Regulations: What Problem Are We Solving?

by Peter B. Marrs
In this report, Marrs explains how the per se stock rule in the proposed section 385 regulationswould broadly apply to many ordinary course transactions, and he recommendsways for Treasury to narrow the scope of the regulationswhile more effectively addressing its concerns about U.S. earnings stripping and untaxed foreign repatriations.
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Presumptive British PM Slams Corporate Tax Dodging

by Stephanie Soong Johnston
U.K. Home Secretary Theresa May,who is poised to take over as prime minister on July 13, came out swinging against tax avoidance by large multinational corporations, vowing to crack down on the practice under her leadership.
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OECD Releases Draft on Groupwide Ratio Rule for Interest Expense

by Ryan Finley
The OECD's new discussion draft on the design and implementation of a groupwide ratio rule provides options for how to fill in the gaps left by the base erosion and profit-shifting report on action 4.
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U.S. Treasury Chief Lew Set for Apple Tax Showdown With EU

by Stephanie Bodoni & Aoifewhite
U.S. Treasury Secretary Jacob J. Lew is set to meetwith European Union antitrust chief Margrethe Vestager thisweek as she prepares to deliver a final verdict on a probe into Apple Inc.'s tax affairs in Ireland.
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May Pledges Corporate Crackdown as Osborne Courts Wall Street

by Alex Morales & Simon Kennedy
U.K. Home Secretary Theresa May pledged to crack down on corporate irresponsibility if she succeeds David Cameron as prime minister, as Chancellor of the Exchequer George Osborne headed towall Street on Monday to shore up investor confidence.
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Financial Giants Lobby Treasury to Ease Debt-Equity Rules

Bloomberg

by Alison Bennett
Some of the nation's biggest financial services companiesÔøΩincluding Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co.ÔøΩare all urging the Treasury Department to give them a break under controversial earnings-stripping rules.
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Cyprus revises tax treaty with India, ratifies new tax treaties, announces 2016 NID yields, and expedites ruline process

  • By PwC
by PwC
The Cyprus government has reported several important tax developments thatwill affect multinational enterprises doing business in Cyprus.
Regarding tax treaties:
  • The Cyprus government on June 30, 2016, announced that it completed negotiations and reached an agreement inwriting for a revised tax treaty between Cyprus and India.
  • The first tax treaty between Cyprus and Bahrain, signed on March 9, 2015, entered into force on April 26, 2016, andwill take effect on January 1, 2017.
  • The first tax treaty between Cyprus and Latvia, signed on May 24, 2016,was ratified by Cyprus on June 3, 2016. The treatywill take effect on January 1 of the year after the countries complete the legal formalities to bring the treaty into force.
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Speaker Paul Ryan And Chairman Kevin Brady Produce A Tax Blueprint To Make America Great Again

by Ralph Benko
Late last month, barely reported by the media amid all the general political static, something really amazing happened. Houseways and Means Chairman Kevin Brady released a truly great tax reform plan.
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Paris urges London to stay tax 'friendly' post Brexit

  • By Times Live
by Times Live
Amid fears of a fiscal "race to the bottom" French Finance Minister Michel Sapin on Monday slammed British plans to reduce corporation tax as part of plans to keep attracting foreign investment after last month's Brexit vote.
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Businesses warn that proposed Treasury tax rule goes too far

by Joseph Lawler
In a desperate attempt to stop companies from moving their headquarters out of the U.S. to avoid taxes, the Obama administration is advancing a rule that businesseswarn could have far-reaching consequences for many kinds of firms.
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Better Process Sought for Commentary on OECD Model Treaty

by Rick Mitchell
Thework to develop a multilateral treaty underwhich countries can quickly adopt recommendations from the OECD's international action plan to combat corporate tax avoidance should include an effort to modernize theway OECD commentary is developed, practitioners said.
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Debt-Equity Rules Generate Hottest Tax Talk in Years

by Laura Davison and Alison Bennett
Treasury's proposal to overhaul how intercompany debt is documented and characterized has drawn the most spirited reaction to tax regulations in recent memory, as some lawmakers and business groups try to pare down rules they saywould be detrimental.
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News Analysis: The Impact of Brexit on U.S. Tax Planning

by Marie Sapirie
In the long term, Brexit could have dramatic consequences for tax planning if the United Kingdom decides to diverge significantly from EU tax policies, but for now, U.S. multinationalswith subsidiaries in the United Kingdom may stickwith the status quo.
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Flurry of Debt-Equity Reg Comments at Deadline Despite Glitch

By Amy Elliott (Tax Notes)
The deadline for submitting comments on the proposed section 385 debt or equity regulations (REG-108060-15 2016 TNT 65-11: IRS Proposed Regulations) passed July 7 amid multiple reports that thosewhowaited until the last minute to submit comments or request to speak at the July 14 public hearing had to contendwith sporadic technical difficulties at regulations.gov.
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News Analysis: Brexit Creates Tax Uncertainties

by Mindy Herzfeld
The future of U.K. tax policy is one of many uncertainties that have emerged following U.K. voters' decision to exit the European Union. For now, it's unclearwhen or evenwhether the countrywill leave, let alone the terms of any breakup.
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BEPS Action 13: Be Prepared for an Era of Transfer Pricing Transparency in Indonesia

by Permana Adi Saputra
Permana Adi Saputra of PB Taxand looks at how the OECD/G-20 base erosion and profit shifting Action Planwill affect transfer pricing regulations and documentation requirements in Indonesia. "Indonesiawill need to incorporate the guidelines into domestic regulations in order to enforce the Action Plan," hewrites.
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Business seeks greater role in crafting multilateral instrument to implement BEPS tax measures

  • By MNE Tax
by MNE Tax (Multinational Tax & Transfer Pricing News)
The OECD on July 4 released 33 comment letters received in response to its discussion draft on the development of a multilateral instrument to implement the tax treaty provisions in the final OECD/G20 base erosion profit shifting (BEPS) plan reports.
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Plan to Curb Tax-Inversion Deals Could Go Too Far

by Gina Chon (New York Times)
There's a harmful flip side to the push against tax-inversion deals in the United States. The Treasury Department's latest plan to curb tax-motivated overseas mergers takes aim at inter-company loans. It is a good idea to curb this so-called earnings stripping. The proposed rule is broad, however, and could hurt normal funding practices.
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Stakeholders Call for MLI Text to Be Made Public

Business stakeholders and tax practitioners called for the text of the OECD's multilateral instrument (MLI) to be made public, saying that providing technical analysis of the MLIwas difficultwithout seeing the actual language used.
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Investment Likely to Plummet Under Debt-Equity Rules: Groups

Bloomberg

Investment by both U.S.-based and foreign-based multinational companieswould drop like a rock under the IRS's controversial rules to combat earnings stripping, two major business groups said.
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Germany Issues ministerial draft bill reflecting BEPS initiatives, EU Directive

  • By PwC

PwC

by PWC
On May 31, 2016, the German Federal Ministry of Finance published a ministerial draft bill intended to implement certain recommendations resulting from the OECD BEPS project and also the provisions of the European Union Mutual Assistance Directive.
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EC probes Belgian, French corporate tax exemptions (1)

Belgium and France are under scrutiny by the European Commission (EC) for offering corporate tax exemptions that distort competition.

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New Brazilian rules on ultimate beneficiary disclosure

  • By ITR

The Brazilian Internal Revenue Service (IRS) has issued Normative Instruction (NI) No. 1.634with the purpose of updating the main regulatory provisions regarding the Corporate Taxpayer Registry (CNPJ).

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EU Vat Action Plan: Heavier burden for businesses?

The European Commission's proposed VAT Action Plan is an ambitious attempt to reform the flailing regime. Joe Stanley-Smith picks through the details to look at the impact it could have on companies.

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Business Reps Neutral on OECD Arbitration Style

by Stephanie Soong Johnston
The business sector doesn't have a preference for one kind of arbitration style in the optional provision on mutual agreement procedure (MAP) arbitration in the OECD's multilateral instrument (MLI), but it's important to have something thatworks for the countries inwhich businesses are involved, representatives said.
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Democrats to Treasury: Ignore Lobbyists in Debt-Equity Fight

by Laura Davison
Ten House Democrats urged Treasury Secretary Jacob Lew to not slow down or change course on a final version of controversial debt-equity rules.
"We urge you not to yield to the intense lobbying against these regulations, directed at both Treasury and the Congress, by multinational business and its trade associations," they said in a July 7 letter about the proposed rules (REG-108060-15).
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Lew to Taxwriters: Treasury Will Review Debt-Equity Reg Comments

by Stephen K. Cooper, Kat Lucero, & Dylan F. Moroses
The Treasury Departmentwill give a "hard look" at the many comments and concerns on the controversial section 385 debt or equity regulations before it finalizes them, Secretary Jacob Lew told reporters July 7 after meetingwith Senate Finance Committee members and staff.
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U.S. Corporate Income Tax Reform and its Spillovers

This paper examines the main distortions of the U.S. corporate income tax (CIT), focusing on its international aspects, and proposes a set of reforms to alleviate them. A bold reform to replace the CITwith a corporate-level rent tax could induce efficiency-enhancing reform of the international tax system. Since fundamental reform is politically difficult, this paper also proposes an incremental reform thatwould reduce tax expenditures, reduce the CIT rate to 25-28 percent, and impose a minimum rent tax on foreign earnings. Finally, this paper analyzes empirically the likely impact of the incremental on corporate revenues outside the U.S.

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Chamber Addresses Treasury's Debt-Equity Debacle

by Caroline L. Harris and J.D. Foster (U.S. Chamber of Commerce)
The U.S. Chamber of Commerce onwednesday submitted comments to the U.S. Department of Treasury regarding the newly proposed Section 385 regulations. The comments submitted by the Chamber are unique in that they specifically reflect the greatest, most immediate concerns of Chamber members. These comments do not purport to address every issue, but they are unique in capturing a consensus of major concerns of the U.S. business community.
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GOP Senators: Treasury rules could erode tax base

by Naomi Jagoda
A group of Republicans on the Senate Finance Committee said that proposed Treasury Department rules aimed at curbing offshore tax deals "threaten to further exacerbate our current economicwoes."
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Policy Options to Address Profit Shifting: Carrots or Sticks?

by Jane G. Gravelle
Policymakers have discussed reducing the shifting of corporate multinational corporations' profits into low-tax jurisdictions through carrots (incentives such as rate reductions) and sticks (such as a minimum tax on foreign-source income). This article indicates that lowering the corporate tax rate or adopting a patent box is unlikely to affect profit shifting but that restrictions such as minimum taxes or interest allocation rules could be successful.
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Treasury to Address Cash Pooling in Final Debt-Equity Rules

by Laura Davison & Kaustuv Basu
Treasury officials told lawmakers that they expect to ease the restrictions on cash-pooling transactions in the final version of the controversial debt-equity regulations, a senior Houseways and Means Committee member said.
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Transfer Pricing Deals to Get Special Scrutiny After Inversions

by Alison Bennett
Transfer pricing deals are among post-inversion transactions IRS agents should be closely scrutinizing, the agency said in a newly posted audit guide.
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