Int'l Tax News

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Taxing Multinational Enterprises as Unitary Entities

Tax Analysts

by Sol Picciotto
Sol Picciotto explores the international tax questions raised by treating multinational enterprises as single or unitary entities.
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Changing Tides: Wading Through the BEPS Implementation Waters

Tax Analysts

by Stephanie Soong Johnston
At the May 19-20 IFA Mauritius chapter's 10th annual Asia/Africa Conference 2016 in Balaclava, Mauritius, hundreds of practitioners, government officials, academics, and civil society representatives gathered to discuss the BEPS project implementation phase and its effects on African and Asian countries, financial centers, and tax planning.
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News Analysis: Debt-Equity Regs -- Treasury's Options

Tax Analysts

Mindy Herzfeld previews the battle that the U.S. governmentwill face in finalizing its recently proposed section 385 regulations and outlines some options Treasurywill have in that process.
For the TNI article, gohere. (Subscription required)

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Section 367 Adrift: Old Statute, New Applications

Peter M. Daub is a partner at Morgan, Lewis & Bockius LLP. In this report,which is the first of two parts, Daub traces the development of section 367 policy and addresses how in recent antiabuse guidance the IRS has altered the application of section 367 to cross-border and foreign-to-foreign transactions.

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News Analysis: The Path to Fragmented Tax Reform

by Marie Sapire (Tax Notes)
The Tax Reform Act of 2014, introduced by former Houseways and Means Committee Chair Dave Camp,was misnamed -- at least regarding the year. A more accurate titlewould have been "A Compendium of Tax Reform Acts for 2015 and Beyond," because that iswhen some of its provisionswill come to fruition.
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BRT Letter to Congress on Treasury Department's Proposed Debt/Equity Regulations

by Kevin Brady (Business Roundtable)
The Business Roundtable has strong concerns about the potential business disruption, significant breadth of impact, and adverse consequences caused by the proposed Section 385 regulations.
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The New U.S. Model Treaty is OUt

Bloomberg

by James J Tobin
James J. Tobin of Ernst & Young looks at changes included in the new U.S. Model Treaty.while the author applauds modifications to the mutual agreement procedure to require mandatory binding arbitration, he questions denials of treaty benefitswhere a "special tax regime" is in play and for payments made by expatriated entities, aswell as changes tightening the limitation on benefits.
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Lawmakers Provide Details on Tax Reform Blueprint

by Kat Lucero (Tax Notes)
An upcoming House tax reform blueprintwill be a future guide for international, business, and individual reform and may contain some tax proposals thatwere considered during a few rounds of member day hearings hosted by theways and Means Committee, according to committee memberswho spoke to Tax Analysts May 26.
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Earnings-Stripping Rules Threaten the Money Business: Banks

Bloomberg

by Alison Bennett
Controversial earnings stripping rules could deal a harsh and unintended blow to the financial industry.
Bankswith thousands of transactions crossing the globe daily say the rules could derail some of the most routine movements of cash in an industrywhose function is to move money around theworld.
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Tax-Writers Press on with Tax Reform Proposals; Treasury to HaveIntense Comment Period on Section 385 Regulations - See more at: http://www.natlawreview.com/article/tax-writers-press-tax-reform-pro

by Brandon C Roman& Stephanie L. Shaker (The National Law Review)
In light of intense scrutiny and pushback from industry, Treasury Deputy Assistant Secretary Bob Stack acknowledged that Treasury "may have missed things" in its latest rulemaking targeting corporate inversions and the ability of multinational corporations to engage in so-called "earnings-stripping" practices.
For the National Law Review article, gohere.

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ECOFIN Adopts CbC Reporting, Postpones Vote on Antiavoidance Directive

Tax Analysts

by JP Finet
The EU Economic and Financial Affairs Council on May 25 approved the implementation of country-by-country reporting for multinational companies and extended through 2017 the 15 percent minimum standard VAT rate.
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How the Proposed Section 6038A Regulations

Bloomberg

by John C. Dworkin
John C. Dworkin of John C. Dworkin P.C. looks at how proposed regulations under Section 6038A affect common ownership structures for foreign investment in U.S. real property.
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Debt-Equity Regs Won't Solve Larger U.S. Tax Problems

by Andrew Velarde (Tax Notes)
Against the backdrop of Treasury's proposed related-party debt-equity regs, practitioners and an officialwith the Joint Committee on Taxation on May 25 explored alternatives for addressing U.S. corporate tax shortcomings,with much of the discussion focusing on the need to follow examples set in the rest of theworld.
For the TNT story, gohere. (Subscription required)

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Inversion Rules Aren't Long-Term Solution: JCT Official

Bloomberg

by Allyson Versprille
Proposed regulations to limit corporate tax inversionswon't provide a lasting solution to the problem, Viva Hammer, legislative counsel for the Joint Committee on Taxation, said.
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Canada continues moving forward with OECD transparency agenda

  • By PwC

PwC

Canada recently announced two measures alignedwith the OECD base erosion and profit shifting (BEPS) project. Effective April 1, 2016, the Canada Revenue Agency began sharing selected Canadian tax rulingswith certain countries in accordancewith BEPS Action 5, and on May 12, Canada signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports.
To read more go here

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Raise more from corporations: Opposing view

Inverted companies remain headquartered in the United States, retaining access to our infrastructure and educatedworkforcewithout paying U.S. corporate income taxes.

Itwould, of course, be best to craft a comprehensive solution to this problem rather than have Treasury playwhac-A-Molewith insufficient tools.

For the USA today article, gohere.

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Private equity funds in Mexica: application for treaty benefits and concerns arising from BEPS Action 6

International Tax Review

by Alfredo Sanchez Torrado and Eduardo Garcia Ruiz
Alfredo Sánchez Torrado and Eduardo García Ruiz examine theway inwhich investments are currently structured in Mexico via private equity funds, the application of treaty benefits by them, aswell as how BEPS Action 6 may affect such application.
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Stack: Debt-Equity Regs Aren't a Very Complicated Sea Change

by Amy S. Elliott (Tax Notes)
While many in the tax bar may be interested in drawing attention to the trauma thatwould be caused by the section 385 debt or equity regulations, Robert Stack, Treasury deputy assistant secretary (international tax affairs),was quick to downplay the impact they'd have on multinationals if they're swiftly finalized.
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'Winning the Tax Wars': Mobilizing Public Revenue, Preventing Tax Evasion

by Christopher Colford (Theworld Bank)
"It is long overdue that Congress restore Subpart F to its original power and end the tax haven drain on our revenues," former Sen. Carl Levin said in May 23 remarks at theworld Bank regarding reducing tax avoidance and secrecy and international tax competition.
To read more go here

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Incentives Key in Developing Countries' Tax Reform Efforts, OEDC Official Says

Tax Analysts

by Alexander Lewis
In the fight against harmful tax competition, the number one issue for developing countries is tax incentives, said Grace Perez-Navarro, deputy director of the OECD's Centre for Tax Policy and Administration.
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Countering Base Erosion Is Impossible Within Current Framework, Panel Says

Tax Analysts

by Ryan Finley
The basic principles of the current international tax regime are fatally flawed and antiavoidance measures that fall short of a complete overhaul are doomed to fail, according to a panel of academics, reform advocates, and other experts.
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European Commission Explains Review of Tax Rulings

Tax Analysts

bywilliam Hoke
Afterweeks of defending itself against criticisms for state aid cases targeting rulings granted to U.S. multinationals, the European Commission has published a detailed paper explaining the criteria for determiningwhether benefits provided by a member state are in violation of EU law.
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Senators Continue to Argue Against EU State Aid Investigations

Tax Analysts

by Kat Lucero
A bipartisan group of Senate taxwriters urged the Treasury Department on May 23 to put pressure on the European Commission to keep it from issuing tax regulations thatwould single out U.S. multinational companies in ongoing state aid investigations.
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Debt-Equity Regs' Contemporaneous Documentation Rules in Context

Tax Analysts

by Amy S. Elliott
Are the documentation requirements in the proposedsection 385debt or equity regulations strict in comparison to those of other countries or do they only seem onerous because U.S. multinationals have historically been lax in achieving the gold standard of contemporaneous documentation?
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Hatch, Wyden: EU State Aid Probe Violates Rule of Law

  • By Alex M. Parker

Bloomberg

by Kevin A. Bell and Alex M. Parker
A bipartisan group of senators, including the chairman and ranking member of the Senate Finance Committee,wrote to the Treasury Department blasting recent European Union "state aid" investigations as violating the rule of law.
For the DTR story, gohere. (subscription required)

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EU Lays Down Law on Tax Deals as Apple Probe Continues

The European Union, locked in a tax battlewith the likes of Apple Inc. and McDonald's Corp., laid down the law in its bid to rein in governments thatwoo multinationalswith special deals allowing them to reduce their fiscal liability by booking profits abroad.
For DTR story, go here Subscription Required

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Boustany: I'll Be Ready With Innovation Box Proposal


Houseways and Means Committee member Charles Boustany Jr. (R-La.) said that although hewasn't happywith the innovation-box draft proposal he released last year, hewill be readywith a revamped plan if there is any Capitol Hill movement on international tax measures.
For the DTR story, go here. (subscription required)

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How the Proposed Section 385 Rules Would Affect Foreign Investment in U.S. Real Property

by John C. Dworkin
John C. Dworkin of John C. Dworkin P.C. looks at how the proposed regulations under Section 385would affect common ownership structures for foreign investment in U.S. real property that have no relation to "inversion" transactions. Dworkin explains how the ruleswould affect foreign operating companies, sovereignwealth funds and foreign family offices.
For the BNA Insight, go here. (subscription required)

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S Corporations: Give Us a Break Under Final Debt-Equity Rules

by Alison Bennett
Tax-favored S corporationswant a break under controversial earnings-stripping rules.
The rules (REG-108060-15) are meant to discourage companies from shifting profits offshore through loans to subsidiaries, but could have the unintended outcome ofwrecking companies' S corporation statusÔøΩan outcomewith dire tax consequences, the industry is telling Treasury.
For the DTR story, go here. (subscription required)

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IRS Guidance Tightens Inversions Rules Awaiting Tax Reform

by Helena Klumpp
Bloomberg BNA's Samuel P. Starr and Helena Klumppwrite thatwhile Congress ponders corporate tax reform, corporate inversion transactions have provided self-help opportunities for U.S. companies. They review the IRS's new anti-inversion rules (T.D. 9761) that target such transactions, aswell as post-inversion transactions that facilitated the removal of U.S. and offshore income from the U.S. tax net.
For the BNA Insight, go here. (subscription required)

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JCT Issues Report on Debt Benefits Over Stock Equity

by Aaron E. Lorenzo
For tax purposes, debt is better than stock equity for corporate capitalization for a number of reasons, according to a Joint Committee on Taxation report.
For the DTR story, gohere. (subscription required)

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News Analysis: Why the New Model Treaty?

by Lee A. Sheppard
Beforewe meditate aboutwho might actually sign the new U.S. model treaty 2016 TNT 32-29: Model Tax Treaties, let's look for a ray of hope in men's fashion.
For the Tax Notes article, go here. (subscription required)

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News Analysis: What's So Bad About BEPS?

The OECD's base erosion and profit-shifting project is based in large part on the premise that those practices are harmful because they deprive governments of needed revenues. Few have disputed this assumption, and even the corporate tax community has not defended base erosion practices.

Among the fewwho arewilling to challenge this basic assumption is Daniel Mitchell of the Cato Institute,whose blog defends international tax competition.

For the TNI article, gohere. (subscription required)

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TAXE II Committee Members Optimistic About EU Tax Base Harmonization

by Ryan Finley
The string of revelations and scandals that have made taxation a major political issue in Europe have provided an "incredible opportunity" for member states to reach consensus on a common consolidated corporate tax base, according to Alain Lamassoure, chair of the TAXE II Committee.
For thewWTD story, go here. (subscription required)

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Adobe Subsidiary Not a PE, Delhi High Court Rules

by Alexander Lewis
The Delhi High Court on May 16 ruled in Adobe Systems Inc. vs. ADIT that a U.S.-based software company's Indian subsidiary is not a permanent establishment under the India-U.S. income tax treaty.
For thewWTD story, go here Subscription Required

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India: Taxing digital transactions in India

by Rakesh Dharawat & Hariharan Gangadharan
The digital age has given rise to significant tax policy challenges in terms of nexus, characterisation of income and other consequential issues.
For the ITR story, go here.

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Asia Tax Forum 2016 - the full story

by Ralph Cunningham
Itwas difficult to escape the overhang of BEPS at International Tax Review's Asia Tax Forum in Singapore this year.
For the ITR story, go here.

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US group urges Congress to cut OECD funding, claims US harmed by BEPS international tax standards

  • By MNE Tax
by MNE Tax
Representatives about 20 US advocacy groups, in a May 12 letter, urged Congress to stop funding the OECD, arguing that itswork developingworldwide standards to tax multinational corporations is contrary to US interests.
For the MNE Tax News story, gohere.

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Is a U.S. Patent Box a Good Idea?

by Yair Holtzman

It may bewise to give favored tax treatment to intellectual property in exchange for keeping it domestic, evenwithout corporate tax reform.
For the CFO.com story, go here.

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Related-Party Debt Not a Rose: IRS Rules Could Make It Stock

by George R. Goodman & Raj Tanden
George R. Goodman and Raj Tanden of Foley & Lardner examine the operation of the IRS's proposed rules on the treatment of related-party debt and how theywould affect corporate groups. "These regulationswould complicate financial planning and increase tax compliance burdens and uncertainties for groupswith corporate members," the authorswrite.
For the BNA Insight, go here. (Subscription required)

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Endangered Species: The U.S.-Based Multinational

by Ken Brewer
In this article, Ken Brewer argues that politicians arewrong aboutwhat causes inversions andwrong about the cure. He offers suggestions for an effective solution.
For the Tax Notes viewpoint, go here. (subscription required)

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The Ineluctable Logic of Adopting an IP Box Tax Regime

by Ike Brannon
In this article, Ike Brannon argues that the adoption of an intellectual property box regime is an achievable corporate tax reform that could return investment and jobs to the United Stateswhile sacrificing relatively little tax revenue.
For the Tax Notes viewpoint, go here. (subscription required)

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Debt-Equity Rules Harmful, Overbroad, Tax Attorney Tells IRS

by Alison Bennett
The government's controversial debt-equity rules are bad news for taxpayers and spell immediate trouble for ordinary intercompany cash loans, a tax partner at a major law firm told the Internal Revenue Service.
For the DTR story, gohere. (subscription required)

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Fewer Shareholders Pay U.S. Taxes on Dividends

A new study showing that a shrinking fraction of shareholders of U.S. corporations pay taxes on dividends is bolstering a drive to revamp the corporate tax system.

The specter of double taxation,which animates complaints about today's U.S. corporate tax code, is receding, according to a new study from the Tax Policy Center.

For thewall Street Journal story, gohere.

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China targets multinationals that shift profits among countries

  • By EJ Insight

China is planning to require multinationals to disclose more detailed information about their overseas affiliates as part of an international effort against tax evasion.

The proposalwould make it more difficult for large companies to avoid taxes by shifting profits among different countries, thewall Street Journal reports, citing tax consultants.

For the EJI Insight story, gohere.

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Partnership Debt Subject to Earnings-Stripping Rules: Treasury

by Alison Bennett
The controversial new earnings-stripping rules are intended to apply to partnership debt, government officials said, but there is stillwork ahead to craft the contours of that application, including looking at how the debt-equity rules can be harmonizedwith the existing partnership tax regime.
For the DTR story, go here. (subscription required)

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Cash Pools May Get Documentation Break in Debt-Equity Rules

by Alison Bennett
Taxpayerswith common central financing arrangements known as cash pools might get a break on tough documentation requirements at the outset of those pools under controversial earnings-stripping rules, a Treasury official said.
For the DTR story, go here. (subscription required)

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Hong Kong's 16.5 Percent Rate Helps Region Attract U.S. IP

by Kevin A. Bell
Alongwith the region's 16.5 percent tax rate, recent global focus on so-called DEMPE transfer pricing functionsÔøΩthe development, enhancement, maintenance, protection and exploitation of intangiblesÔøΩbenefits Hong Kong as it seeks to attract U.S. group intellectual property.
For the DTR story, go here. (subscription required)

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Treasury Official: Model Treaty Guidance Due This Summer

by John Herzfeld
A technical explanation of aspects of the active-trade-or-business test in the U.S. Model Income Tax Treaty, originally due this spring, is now expected to come out by the end of the summer, a Treasury Department official said.
For the DTR story, go here. (subscription required)

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Study: Australian Corporate Tax Cut to Benefit U.S. Most

by Murray Griffin
Australia's proposal to cut the corporate tax ratewill benefit the U.S. government the most because of existing double taxation agreements thatwould boost U.S. tax revenues, according to a study by the Australia Institute.
For the DTR story, go here. (subscription required)

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