NEWS BRIEFS for May 31 2016
The latest headline news from TP Week includes: EU ministers postpone talks on corporate tax avoidance; French prosecutors hope to analyse Google data within months; and UK considers secondary adjustment rule
EU ministers postpone discussion on corporate tax avoidance until June 17
May 31 - After failing to reach an agreement on corporate tax avoidance at a meeting of the ECOFIN, European Union finance ministers will try again on June 17 when they discuss new rules to counter multinationals who disproportionately reduce tax bills.
“Hopefully we can come to a final agreement on this proposal in June,” Dutch Finance Minister Jeroen Dijsselbloem said, referring to the EU Commission’s proposed anti-tax avoidance directive.
While corporate tax practices cost EU states an estimated €70 billion ($78 billion) a year in lost revenues, several EU ministers are concerned about some of the proposals involving MNEs, including rules to deter companies that shift profits to low-tax countries and plans that would force them to pay tax on dividends made in tax-free countries. The proposal would add EU-wide limits on interest deductibility, hybrid mismatch rules, an exit tax, and a “switch over” clause.
The proposal requires support from all 28 EU countries to pass.
French prosecutors worked offline for months before Google dawn raid
May 31 - French investigators secretly referred to their Google investigation as 'tulip' and worked offline to prevent leaks as they prepared a dawn raid at Google's Paris office last week, French financial prosecutor Eliane Houlette told radio station Europe1 in an interview on Sunday.
“We decided to never utter the word ‘Google,’ to give the firm another name,” she said, adding that “we worked with computers, but pretty much only with word processing”.
Houlette said investigators collected “several terabytes" of data that she hoped would take months, rather than years, to analyse. France is investigating whether Google's Irish division, a unit of Alphabet Inc., has permanent establishment in France and, if so, owes back taxes of about 1.6 billion euros ($1.8 billion).
Google, which employs about 700 staff in France, has said it is co-operating fully with investigators.
UK invites comments on proposals for secondary adjustment rule
May 31 - Britain is considering adding a secondary adjustment rule to its transfer pricing legislation to ensure taxpayer compliance and is consulting on policy design and implementation issues.
Secondary adjustments are a method to realign the economic benefit of a deal with the arm’s length position, the government said.
The UK expected the comments would be considered while drafting any legislation for inclusion in Finance Bill 2017.While multinationals would likely be the only party to be effected, the government has invited participation from any interested external stakeholders.
The consultation runs to August 18. A response will be published within 12 weeks of the consultation closing, and a decision is to be made on whether the rule will be implemented.
Business Roundtable urges US Treasury rethink of 'inversion' rule changes
May 31 - The Business Roundtable, the US group representing chief executive officers of leading companies, warns that a change to the rules on corporate 'inversions' would overturn decades of case law, regulatory guidance, and fundamental tax principles.
The group wrote to Republicans and Democrats on the congressional tax-writing committees calling the proposal " extensive and dramatic". The new rules would re-characterise some debt as equity, the group said, urging a rethink.
On April 4, the Treasury issued plans for new rules that would effort to curb 'corporate inversions', transactions - such as the failed Pfizer-Allergon deal - in which US companies reincorporate overseas to lower their taxes. The Roundtable argued that many routine business transactions would also be caught in the proposed US rule.