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India signs first bilateral APA

December 20, 2014

India signed its first bilateral advance pricing agreement (APA) on December 19, agreeing with Japan and a Japanese company to aspects of the company's transfer pricing for five year term, according to a Central Board of Direct Taxes release. The CBDT said that the APA was finalized in about 18 months, and noted that this is a shorter period than most governments take to finalize an APA. See, release.

EU passes amendment to stop hybrid loan mismatches

July 8, 2014

The Council of the European Union, on July 8, formally adopted an amendment to the parent-subsidiary directive to prevent multinational groups from achieving double non-taxation from hybrid loan arrangements. A political agreement on the matter was reached on June 20. States have until December 31, 2015, to add the amendment to their laws. Press release; Amendment to Council Directive: 10996/14, 11291/14, 11291/14 ADD1; Prior coverage

U.S. transfer pricing official concerned about BEPS project, clarifies transfer pricing roadmap

April 30, 2014

The OECD's Base Erosion and Profit Shifting (BEPS) initiative has increased tax controversies between nations and is likely to continue to do so in the future, Samuel Maruca, U.S. IRS Director of Transfer Pricing Operations said April 30."My fear is that some of our treaty partners view this as a license [and are] reaching out and helping [themselves] to the tax base," said Maruca, who spoke during a webinar sponsored by EY. Maruca . . .

US and India still dispute transfer pricing margins

April 9, 2014

The US and India remain at loggerheads over the percentage of profit to be allocated to India subsidiaries of US IT and ITeS companies, with US pushing for a 12 - 13 percent rate and India unwilling to go below 18 percent, according to a an April 9 Financial Express article written by Santosh Tiwari. An unnamed official quoted by Tiwari suggested that "the way forward could be to tackle the existing cases at a higher rate and new cases at the rate closer to what the US wants." Read More: Financial Express

China finalizes GAAR implementing guidance

December 20, 2014

The Chinese government has finalized administrative measures implementing its general antiabuse rule (GAAR), the State Administration of Taxation (SAT) announced December 12. The guidance implements GAAR rules introduced in 2008, addressing the law's scope, judging criteria, adjustment methods, working procedures, and dispute resolutions, the SAT said in . . .

UK proposes MNE “diverted profits” tax, releases consultation on hybrid mismatches

December 3, 2014

The UK government will introduce a new "diverted profits tax" to ensure that multinational corporations pay the correct about of tax, British Chancellor of the Exchequer, George Osborne, announced December 3 in his Autumn Statement. The UK also released a consultation on hybrid mismatches, and Osborne reaffirmed the UK's intention to introduce country-by-country reporting for . . .

OECD officials say multilateral instrument is legal, more BEPS guidance coming

May 26, 2014

Countries can legally use a multilateral instrument to amend existing bilateral tax treaties to implement the OECD's base erosion and profit shifting (BEPS) initiative, Pascal Saint-Amans, Director, OECD Center for Tax Policy and Administration, said on May 26, during an update of OECD progress on the BEPS action plan.Saint-Amans said that a team of international lawyers have found legal precedent in areas other than tax . . .

Russian Bill Would Introduce CFC Regime

April 16, 2014

Russia's Ministry of Finance, on March 18, published a bill introducing controlled foreign company (“CFC”) rules to the Russian tax laws. The bill also deems a foreign company as a Russian tax resident when the company's management is in Russia and taxes sales of shares in an entity where the entity's assets consist of indirectly owned Russian real property. For analysis, see CMS Bureau Francis Lefebvre, Laggan & Associates Ltd, Debevoise & Plimpton LLP, EY

UK outlines priorities for countering base erosion and profit shifting

March 23, 2014

HM Treasury and HM Revenue and Customs have released a position paper outlining the UK's priorities for the ongoing work with G20 and OECD taking forward the 15 point Action Plan to counter Base Erosion and Profit Shifting.The paper includes proposals for new international rules to address cross-border business structures or finance transactions, a disclosure scheme for international tax schemes, and the creation of a single Large Business Directorate within HMRC.HM Treasury and HM Revenue and Customs

Proposed updates to US model tax treaty address stateless income, corporate inversions, limitation on benefits

May 20, 2015

US Treasury on May 20 released for public comment draft proposals that would significantly modify the US Model Income Tax Convention. Included are proposals to address stateless income, discourage corporate inversions, and permit expanded use of the treaty through a derivatives benefits rule. The next US model would also include a provision requiring dispute resolution . . .

OECD official says BEPS transfer pricing draft strengthens arm’s length standard

February 12, 2015

Senior OECD officials defended draft changes to the OECD transfer pricing guidelines on risk, recharacterization, and special measures February 12, arguing that revisions to the guidelines are needed to strengthen the arm's length principle and to properly align a transaction's form with its substance. The discussion draft, released December 19, proposes significant . . .
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