Magazine

Cover Story

Only one way out: Simplifying CFC regimes

The number of countries adopting controlled foreign corporation (CFC) regimes has complicated business operations and forced them to change. Danish Mehboob talks to taxpayers who are trying to avoid getting lost in the labyrinth of multiple tax risks and unexpected audits.

Features

Global minimum taxation: A matter of time

Minimum tax red flags have appeared in recent legislation as countries and organisations race to address perceived inequities within the international tax regime.
European Tax Awards 2019: The winners

The winners of International Tax Review’s 15th European Tax Awards have been announced.
Tax Advisory Survey 2019

Tax and trade wars among governments and the battles companies face against tax authorities through audits and inevitable disputes mean even the most super-human tax director among us needs a little help.
How global tax reforms apply to the extractive industries

Alexandra Readhead investigates whether IMF and OECD proposals on how to tax the digital economy, apply formulary apportionment, shift taxing rights and address profit shifting could apply to the natural resources sector. Alternatively, could source-based taxation improvements hold the answer?
UK tax transparent funds: Five years on from the first launch

Five years after the launch of the first UK authorised contractual scheme (ACS) – also known as the UK tax transparent fund (UK TTF) – in 2014, there are 22 UK TTFs in the market, with 172 sub-funds amounting to billions of assets under management. Mariano Giralt, Christopher Mitchell and Gildine Cassou look at the scheme’s impact.
India’s angel tax

Generally, income taxes are not levied at the same time as the investment transaction in the share capital of any company because this amounts to the allotment of new shares. However, writes Anand Jaiswal of Infosys, this route of investment has been misused by many to dump huge funds in otherwise less valued companies for various reasons, including round-tripping and money laundering.
How concerned should companies be about data they send to tax authorities becoming public?

It’s interesting that the subject of data submitted to the tax authorities becoming public, either through a data leak or public country-by-country reporting (CbCR), is clearly still a significant concern among tax directors.
Market insight: People moves

In this month’s round-up of individual and company changes, Andersen Global expanded into the Middle East, while several tax teams in Central America grew and a number of lead partners were appointed to major firms worldwide.

Special Features

Tax transformation: What companies need to know

In a wide-ranging interview, ITR speaks to Terri LaRae, partner and leader of the global operations transformation tax team at Deloitte, about the factors driving tax transformation and how tax departments can get the best out of it.
Italy addresses double taxation arising from foreign TP adjustments

Italy has recently implemented a new procedure to mitigate double taxation arising from foreign transfer pricing adjustments. Chiomenti’s Raul-Angelo Papotti, Paolo Giacometti and Andrea Alcara discuss the procedure, conditions and mandatory elements that must be addressed in order for an enterprise to seek an adjustment.
Transfer pricing controversy and governance challenges in Luxembourg

Luxembourg’s stability and innovative culture has made it a global leader in the financial services sector. However, the greater interaction between the tax and regulatory dimension is creating complex tax governance and controversy challenges. Deloitte Luxembourg’s Ralf Heussner and Enrique Marchesi-Herce explore the impact BEPS changes will have on Luxembourg and its financial services sector
Russia’s 20-year evolution of transfer pricing practices

In twenty short years, Russia has undergone a rapid transformation in transfer pricing (TP) adoption and harmonisation with the OECD’s norms. EY CIS’s Evgenia Veter traces the nation’s adoption, evolution and future development of TP policy, while exploring the key areas Russian tax authorities have currently highlighted as their focus

News Analysis

Qualified majority voting will drive reforms, says EC’s tax chief

The European Commission head of company taxation initiatives has told International Tax Review about his hopes and frustrations in EU corporate tax and why he supports qualified majority voting.
Taxpayers confident UK will follow EU state aid rules in no-deal Brexit

Taxpayers expect the UK to remain aligned with EU state aid rules in the event of a no-deal Brexit, but many hope any potential future amendments will not stifle investments in UK businesses or negatively impact state aid disputes.
Companies measure tax departments on their ability to cut risk, not effective tax rates

Managing tax risk is the most important metric by which tax departments are measured, with the more traditional target of lowering the company’s effective tax rate being less important to tax heads. However, CEOs seem to know little about tax KPIs and how, or why, they are chosen.
Businesses disappointed with OECD’s digital tax progress

As G20 countries ratify the OECD’s work on taxing the digital economy, tax executives expressed their concern to International Tax Review that the body has not moved beyond proposals that they find problematic.
Residence-by-investment schemes continue to create tax loopholes

A joint investigation by International Tax Review and Practice Insight has uncovered evidence of tax reporting gaps in the way the OECD's Common Reporting Standard (CRS) applies to international securities markets.
US companies fear TCJA amendments by Democrats

Some US taxpayers are considering inversions because they fear negative tax implications if the Democrats gain control of the presidency and Congress in the 2020 elections and raise the corporate tax rate.
Tax heads encourage more companies to use ICAP

Tax leaders from Barilla, Repsol and Shell have encouraged their contemporaries to sign up for the International Compliance Assurance Programme (ICAP), before the window to get involved closes later this month.
Case study: Shell’s participation in ICAP

Danny Houben, project lead for Shell’s ICAP team, talks to International Tax Review about how his company got ready to participate in the OECD’s International Compliance Assurance Programme (ICAP).
Case study: Repsol’s participation in ICAP

Rocío Bermúdez, tax global practices & transfer pricing senior manager at Repsol, spoke to ITR about her company’s participation in the first pilot of the International Compliance Assurance Programme.
The negative aspects of ICAP

While feedback on the International Compliance Assurance Programme (ICAP) has been overwhelmingly positive, unsurprisingly, the first pilot did encounter some teething problems.
OECD won’t rush ICAP expansion despite scheme’s popularity

The OECD’s Achim Pross says his ultimate aim is to expand the International Compliance Assurance Programme (ICAP), but companies may be disappointed to learn that it could be a relatively slow process.

Editorial

Tax Relief

International Correspondents

Argentina: New tax promotional regime for knowledge-based activities

Multinationals in Argentina may want to rethink the way they operate in the country to take advantage of tax benefits available from 2020 under the new tax promotional regime for the so-called knowledge-based economy.
Chilean tax reform includes VAT exemption modification

On August 23 2018, the Chilean government presented a tax modernisation bill, which aims to introduce a series of modifications seeking to simplify the Chilean income tax system and incorporate new tax regulations.
Germany: Relocations of functions and adjustment payments

Germany has been an early indicator of how the OECD’s rules on so-called ‘hard-to-value intangibles’ may look when implemented at the national level.
Greece: Greece adopts EU ATAD I

In April 2019, Greece transposed the EU Council Directive 2016/1164, laying down rules against tax avoidance practices that directly affect the functioning of the internal market (Anti-Tax Avoidance Directive I, or ATAD I), into the domestic law through Law 4607/2019.
India: Demystification of scope for claiming tax treaty benefits – welcome stride for foreign investors

The Bombay High Court (the High Court) has delivered a landmark precedent while disposing the writ petition filed by a Mauritian company (the petitioner).
Indonesia exempts taxpayers from late submission penalties

The government has issued Director General of Tax Decision No. KEP-440/PJ/2019, concerning the exemption from administrative penalties for the late submission of tax returns (SPT) that were due on April 30 2019.
Israel: Tax authorities provide certainty on foreign fund investments

The stake of foreign investment in the Israeli high-tech industry reached 77% of total capital raised in 2018, and 30 new venture funds were born in 2018, raising a record $2.6 billion compared to ‘only’ $1.6 billion in 2017.
Italy: Undisclosed dependent agent PE in Italy: Trends and operational impacts

In recent years multinational groups have, sensibly, modified their business models to keep up with globalisation and safeguard their competitiveness.
Luxembourg: Luxembourg adopts exit tax rules aligned with ATAD 1

The Luxembourg Parliament transposed the EU Anti-Tax Avoidance Directive 1 (ATAD 1) into Luxembourg legislation on December 21 2018
Malta: Malta publishes tax grouping rules

The recently published Consolidated Group (Income Tax) Rules, 2019, grant groups, as defined therein, the option to be treated as a single ‘fiscal unit’ for income tax purposes.
Mexico: The decree to end all tax pardon decrees

Although this title may read like the like a title to a thriller novel or at least a pretty good campaign soundbite, it comes very close to the actual name of a recently published executive decree in Mexico.
New Zealand proposes interim digital services tax

The New Zealand government has released a discussion document proposing a digital services tax (DST) as an interim measure while OECD discussions continue on possible changes to the international tax framework to address the digitalisation of the global economy.
Poland: Obligatory split payment mechanism and white list of VAT taxpayers introduced

The Polish Ministry of Finance is amending the VAT Act and some other acts, providing for the introduction of a mandatory split payment model for certain transactions from September 1 2019.
Romania: EC pushes Romania to revise statute of limitation on customs debts

Four months after the European Commission (EC) requested Romania to lower its statute of limitation for additional customs liabilities from five years to three years, we have not identified any action from the Romanian authorities to comply with the request.
Russia: First ruling on foreign company’s Russian tax residency for VAT

Place-of-supply rules state that consulting and legal services are deemed to be provided in Russia (and therefore VATable) if the purchaser carries out its activities in Russia.
Spain: Spanish National Appellate Court says transfer pricing adjustments to the median must be grounded on comparability defects

On March 6 2019, the Spanish National Appellate Court (NAC), in a particularly relevant transfer pricing judgement, ruled on the selection of the point in the range of values of a sample obtained from a benchmarking analysis to justify the arm’s-length nature of intra-group prices.
Switzerland: Swiss corporate tax reform bill to apply from 2020

Swiss voters approved the Swiss tax reform and AHV Financing Bill. With headline tax rates of 12%-14% in most cantons, which can be reduced to as low as 9% with instruments such as the patent box, Switzerland will remain attractive to foreign investors.
US: Sale of a partnership interest: Withholding tax

The US Treasury and the Internal Revenue Service (IRS) have proposed withholding tax regulations regarding the Tax Cuts and Jobs Act (TCJA) provisions, addressing sales of interests in partnerships engaged in the conduct of a US trade or business.