The Australian government on September 16 moved forward with plans to address multinational tax avoidance, introducing a bill in the House of Representatives that targets large companies that avoid the permanent establishment rules. The bill also proposes new transfer pricing documentation and country-by-country . . .
Tax officials at a March 19 consultation on draft revisions to OECD transfer pricing guidelines expressed interest in adopting a special measure proposed in the draft that would address hard-to-value intangibles. Officials also discussed the weight that should be accorded a related party . . .
The Tax Court of Canada has concluded that TDL Group, a Canadian subsidiary of Wendy’s International Inc., the US restaurant chain, may not deduct $10 million (7.8 million USD) interest on loans from its parent in 2002. TDL used the loan to acquire additional shares of its wholly owned US subsidiary, Tim Donut US Limited, Inc., which then lent
The European Commission on November 14 published its preliminary opinion that an advance pricing agreement (APA) granted by the Netherlands to a Starbucks subsidiary constitutes illegal state aid. The inquiry, first announced in June, is one of four state aid investigations recently initiated by the Commission clamping down on EU states that grant sweetheart deals to . . .
India’s government will amend its tax regulations to allow for the roll back of advance pricing agreements (APAs) to the previous four years, Finance Minister Arun Jaitley announced during a July 10 speech outlining the 2014-15 Union Budget.
The new rules, long sought by international firms, could assist in resolving India’s huge backlog of transfer pricing disputes, permitting concepts agreed to in an APA between the government and a taxpayer to apply to previous tax years.
Jaitley said the government will also introduce a “range concept” to determine arm’s length price for transfer pricing, though arithmetic mean . . .
The Tax Court of Canada, on June 10, ruled in Marzen Artistic Aluminum Ltd. that marketing fees paid to Marzen’s wholly owned subsidiary, Starline International Inc (SII), were not arm’s length.
SII was incorporated in Barbados to act as Marzen’s agent for sales of windows in the U.S.
. . .
India and Mauritius have reached consensus on the conclusion of a tax treaty, the Mauritian government announced July 1. Agreement was reached yesterday following discussions held by a joint working group of Indian and Mauritian officials . . .
An OECD discussion draft released December 16 proposes to modify OECD transfer pricing guidelines to clarify that the arm’s length price for commodities can be determined by reference to a commodity’s quoted or publicly available prices. The guidance also sets the shipment date as the default pricing date. . . .
The Canada Revenue Agency (CRA) has released its Mutual Agreement Procedure (MAP) Program report for the
. . .
The European Court of Justice (ECJ), on April 10, ruled that Polish tax laws that exempt from withholding tax dividends paid to investment funds located in Poland and other EU countries, but that do not exempt dividends paid to funds located outside the EU, may be invalid because the laws restrict free movement of capital.
As a result, U.S. investment fund, Emerging Market Series of DFA Investment. . .
UK businesses must adjust their accounting for VAT on intragroup supplies of services beginning in 2016 to follow the European Court of Justice’s ruling in Skandia America, HMRC said in a policy briefing released February 10. . . .
The OECD on December 18 released four more discussion drafts addressing aspects of the OECD/G20 base erosion and profit shifting (BEPS) action plan. The drafts concern the application of VAT/GST to business-to-consumer (B2C) supplies of services and intangibles, seek to limit BEPS through interest deductions, and propose ways to improve the mutual agreement procedure (MAP) dispute resolution process. . . .
HM Treasury’s David Gauke on October 3 said the UK does not support the the adoption of the nexus approach described the OECD’s interim report on harmful tax practices to determine if intellectual property regimes reward “substantial activities” . . .
Treasurer Joe Hockey in a Sept. 4 release said that he has asked the Commissioner of Taxation to examine whether location specific profits are being generated in Australia on account of the high prices multinationals charge to consumers and, if so, whether multinationals are appropriately allocating these profits to Australian operations under the transfer pricing rules.
“Australian consumers often pay much higher prices compared to United States . . .
The Slovak Ministry of Finance is considering re-introducing thin capitalization rules into Slovak tax law, according to a June 16 report by KPMG.
An ITAT ruling, Bharti Airtel, has concluded that a corporate guarantee is not an international transaction under the Indian transfer pricing regulations, according to Vijay Iyer, EY, in an article submitted to the Business Standard
The US IRS has announced that the FATCA regulations will be amended to extend transition rules for gross proceeds, foreign passthru payments, limited branches and limited . . .
In a significant blow to the IRS, the US Tax Court has invalidated 2003 cost-sharing regulations that require related parties to share stock-based compensation costs in qualified cost-sharing agreements, finding that the regulations do not meet the standard of reasoned . . .
The annual meetings of the UN Committee of Experts on International Cooperation in Tax Matters should be moved from Geneva to New York to allow greater stakeholder input and better coordination of UN operations, the UN Secretary-General. . .
The European Commission on February 3 opened a state aid investigation into the private ruling practices of the Belgian tax administration. The rulings allow multinational entities in Belgium to reduce their corporate tax liability by “excess profits” that allegedly result from the advantage of being part . . .
The EU Council, on January 27, amended the EU parent-subsidiary directive, adding a new antiavoidance rule. The action follows up on a political agreement reached on December 9 to amend the directive. The directive exempts from taxation dividends and other profit distributions received by parent companies from subsidiaries located in different member states. The amended directive provides that tax exemptions for . . .
The OECD on December 19 released a discussion draft proposing significant revisions to the OECD transfer pricing guidelines to address base erosion and profit shifting (BEPS). The draft seeks to provide a more accurate delineation of related party transactions, provides guidance on the relevance and allocation of risk, and provides for the recharacterization of transactions in some cases. The draft also sets out five “special measures,” including . . .
G20 finance ministers, in a communique released following their Sept. 20-21 meeting in Carins, Australia, have expressed approval of the progress made toward completion of the G20 OECD Base Erosion and Profit Shifting (BEPS) Action Plan and have committed to finalizing all action items by 2015. Further, the ministers endorsed the finalized global Common Reporting Standard for automatic exchange of tax information, committing to exchange of information by 2017 or end-2018, subject to the completion of legislative procedures. Communique. See also, G20 release, prior coverage of BEPS recommendations.
UK formally commits to country-by-country reporting template: The UK has agreed to implement the country-by-country reporting template provided for in the OECD/G20 BEPS recommendations, Financial Secretary to the Treasury David Gauke announced in a Sept. 20 release. See, UK release.
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India disputes binding arbitration proposals in BEPS recommendations: In a Sept. 22 speech before the G20, India’s Minister of State for Finance expressed support for the OECD/G20 BEPS project but said that developing nations had “major concerns” with proposals to introduce binding arbitration into the mutual agreement procedure for tax treaties. See, speech of Smt. Nirmala Sitharaman, India Minister of State for Finance. See, related coverage.
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The OECD and Global Forum announce mandate to assist developing nations with BEPS: The OECD and its Global Forum on Transparency and Exchange of Information announced on Sept. 22 that they have been mandated by the G20 to develop toolkits to support developing countries in addressing BEPS and to launch pilot projects to assist them to move towards automatic exchange of information. The OECD said it will report to the G20 Leaders in November on its plan to deepen the involvement of developing countries in the OECD/G20 BEPS project and ensure that their concerns are addressed. OECD release.
Luxembourg and France on Sept. 5 signed the 4th amendment to their 1958 double tax agreement, providing for source country taxation of gains from the sale of shares of companies that primarily invest in immovable property, such as real estate. Text of the amendment (in French), release (in French). For analysis, see Arendt & Medernach, Loyens & Loeff, Baker & McKenzie
French tax authorities, on August 5, published regulations under new Article 212 1-b of the French tax code, which limits interest deductions when the debtor and creditor are affiliated entities, writes Taxand France, in an August 18 report. For analysis of the new regulations, see Taxand France. See, also KPMG.
An OECD report, released August 1, identifies the main sources of base erosion and profit shifting (BEPS) in developing countries and the extent to which the OECD/G20 Action Plan addresses these concerns.
After interviewing developing nation officials. . .
Guidance released by Ireland’s Office of the Revenue Commissioners on July 1 enhances double tax relief for foreign tax paid by foreign branches of Irish companies, permitting companies to carryback the foreign tax credit in . . .
The U.S. IRS, on June 13, released the following private letter rulings (PLRs) that involve multinational entities
. . .
The OECD has released a discussion draft addressing action 6 of its base erosion and profit shifting initiative. Source: OECD Press Release, OECD Draft on Preventing Treaty Abuse
Analysis: KPMG, Skadden, Arps, Slate, Meagher & Flom LLP , Osler, Hoskin & Harcourt LLP, EY
The US IRS has released its Transfer Pricing Audit Roadmap, which provides recommended audit procedures, links to reference materials, and insight into what to expect during a transfer pricing examination. See, Roadmap, release. For analysis, see KPMG, PwC
The US IRS on August 12 released guidance specifying new procedures to request assistance from the US competent authority under income tax treaties and to obtain an advance pricing agreement . . .
The Swedish government, on April 22, proposed legislative amendments that would disallow a tax exemption for dividends paid to a Swedish company that can be deducted as interest by the distributing company and that would strengthen antiabuse rules pertaining to withholding taxes, writes EY in an April 24 Global Tax Alert. See, EY.
The European Court of Justice on February 3 ruled that a UK law that puts restrictions on the ability of group companies to offset gains with nonresident subsidiary losses is compatible with EU law, rejecting the European Commission’s claim that the law made it “virtually impossible” . . .
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.
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