ITR Spring Issue 2023: Editorial

Our cover story looks at the European Commission’s work on the Business in Europe: Framework for Income Taxation initiative and what companies want to see from it. It’s crunch time for European governments to decide whether there will be an EU corporate tax system.

An EU-wide corporate tax base with its own transfer pricing (TP) rules may finally be designed this year. The European Commission has taken some old ideas like the common consolidated corporate tax base and combined them with new concepts from the OECD’s two-pillar solution.

A limited version of formulary apportionment may one day become a reality in the EU, but there are many obstacles to pass along the way. The future of the arm’s-length principle and the prospects for a global minimum corporate tax rate are at stake.

Turning abstract concepts into concrete policies is easier said than done. The OECD may have created the groundwork for BEFIT, but the Commission’s initiative could become an example of how pillars one and two should work in practice.

We have a comprehensive issue of ITR this season, covering everything from the Brazil-UK tax treaty and the tax challenges of global mobility to Indian tax disputes and the TP impact of US sanctions on China. This issue includes an analysis of the US budget proposal for 2024 and two features on the implementation of pillar two in Asia.

Meanwhile, the Supreme Court of Canada is going to hear a case brought by Dow Chemical in its bid to secure a hearing at the Tax Court of Canada. This dispute will set a crucial precedent for taxpayers.

As we get further into 2023, the pace of change in tax continues to gather momentum. The OECD may have secured a global minimum corporate rate, but taxpayers are still waiting to see if there will be a final deal on pillar one this summer.

Read the ITR Spring Issue 2023 here