Taxation Archives

ICC’s Danilovich Writes in FT on Importance of Services to American Economy

Published on February 21, 2017

The Financial Times has published a letter to the editor from ICC Secretary General John Danilovich on the importance of services to the American economy. Danilovich, who has served as U.S. ambassador to Brazil and Costa Rica, writes that “tit-for-tat trade responses sparked by new border taxes could come at a considerable cost for the U.S. services sector– and the growing number of Americans whose livelihoods depend on it. When it comes to trade policy, nostalgia is no substitute for the realities of today’s global economy.”

To read Danilovich’s letter in the FT, please visit this link (subscriber log-in is required).

USCIB in the News: Joint Letter Seeks Fair Play in India

Published on February 6, 2017

USCIB has recently been cited in two articles, the Economic Times India and the International Business Times India,  both of which featured a multi-industry letter that was sent to Congress regarding the United States’ role in ensuring fair play in India for American companies. USCIB joined a group of over twenty eminent American business organizations and industry groups, many of which are also USCIB members. The letter stated that “businesses in the U.S. continue to face an evolving array of tariff and non-tariff barriers, both longstanding and new, which impede businesses and manufactures in the United States from competing fairly in India and creating jobs here at home.”

The letter urges the U.S. government, including Congress, to use all available channels to ensure fair play and to support Indian efforts that align with U.S. goals. The letter emphasized the need to actively use existing as well as new platforms and tools to raise and resolve longstanding issues, including the U.S.-India Strategic and Commercial Dialogue, the U.S.-India Trade Policy Forum, and the WTO dispute settlement.

The letter is available here.

US Unlikely to Sign New Global Tax Treaty

Published on December 2, 2016

Businessman hand touching tax word on virtual screen the concept of online taxation.

USCIB’s vice president for taxation policy, Carol Doran Klein, was quoted extensively in a November 30 Bloomberg BNA article on the OECD’s multilateral tax treaty, known as the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting. According to Doran Klein, while many countries are likely to sign on to parts of the treaty, it is unlikely the U.S. will sign on mainly because the multilateral instrument (MLI) “does not have a lot to offer the U.S. Many of the provisions are variations on treaty policies that the U.S. has been implementing for decades.”

Regarding effect on business, Doran Klein said it will be a challenge for companies and their advisers to analyze the changes made by the MLI to individual bilateral treaties. “This is actually a huge issue, because it may be difficult to work through exactly what the new treaty language is.” Doran Klein said she is worried that the tax treaty area will wind up like the trade area. The trade agreements are very difficult to read and understand, because they refer back to other agreements for basic principles. “I believe that the reason they do that is they do not want to open up the fundamentals of the old agreements to complete renegotiation, but it is therefore extremely difficult to understand the obligations.”

To read the full story, visit Bloomberg BNA (subscription required).

The Uncertain U.S. Role in Global Tax Debate

Published on November 21, 2016

BEPS TaxationUSCIB’s vice president for tax, Carol Doran Klein, has recently been quoted in Bloomberg Government amid uncertainty around the U.S. role in global tax rewrite under President-elect Trump’s administration. Among the various issues, the project on tax base erosion and profit shifting (BEPS) will likely not unravel. Doran Klein trusts that the BEPS project will be included in the new administration’s ongoing work, hoping that the U.S. will “continue to participate actively because having the U.S. Treasury at the table makes the rules more likely to reflect the concerns of the U.S. as a government and the U.S. business community.” She goes on to say that there are “many countries that are getting significant benefits from the BEPS project, including things that have already been implemented, such as the reporting requirements.”

Read the whole story here. Please note you need a subscription to Bloomberg Government for full access.

USCIB/OECD/BIAC International Tax Conference

USCIB, OECD, and BIAC, in cooperation with IFA-USA, ITPF, NFTC, OFII, TCPI, TEI and Tax Foundation, will host its annual conference on the OECD’s new international taxation initiatives on June 5-6, 2017 in Washington, D.C. This conference will provide a unique opportunity for the U.S. business community to interact with key representatives from the OECD Centre for Tax Policy and Administration and senior tax officials from the U.S. and other key countries involved in the OECD/G-20 BEPS project.

 

USCIB Welcomes Treasury White Paper Criticizing EU State Aid Investigations

Published on August 24, 2016

Fountain pen on taxNew York, N.Y., August 24, 2016 – The United States Council for International Business (USCIB), which champions the global interests of American companies, welcomed the U.S. Treasury’s white paper criticizing the European Commission’s ongoing state aid investigations. The investigations are aimed at recouping prior-year tax benefits freely granted by European Union member state tax authorities on companies’ global operations.

“We wholeheartedly agree with the Treasury’s conclusion that these tax investigations challenge EU member state tax sovereignty, go far beyond accepted practice and threaten to undermine ongoing efforts to strengthen international tax cooperation,” said USCIB President and CEO Peter M. Robinson. “USCIB is concerned that these moves by the EU could dramatically undercut the OECD’s efforts to build a new and stable international consensus.”

After three years of negotiations, the OECD/G20 project on base erosion and profit shifting (BEPS) designed to address corporate tax avoidance concluded last year with governments developing a framework for modernizing international tax rules.

In a blog post accompanying the release of the white paper, Robert Stack, deputy assistant secretary of the Treasury for international tax affairs, wrote: “These investigations have major implications for the United States. In particular, recoveries imposed by the Commission would have an outsized impact on U.S. companies. … The investigations have global implications as well for the international tax system and the G20’s agenda to combat BEPS while improving tax certainty to fuel growth and investment.

Implementation of the BEPS project was a major focus of USCIB’s most recent OECD International Tax Conference, held last June in Washington, D.C. USCIB provides American business input to the OECD’s work on global tax policy through its role as the U.S. member of BIAC, the Business and Industry Advisory Committee to the OECD.

About USCIB:
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

Contact:
Jonathan Huneke, VP Communications, USCIB
+1 212.7035043 or jhuneke@uscib.org

Businesses Say Proposed Tax Rule Is Too Complicated

Published on July 6, 2016

USCIB Vice President and International Tax Counsel Carol Doran Klein and Chair of USCIB’s Taxation Committee William Sample (Microsoft) were quoted in a July 6 Wall Street Journal article about the U.S. Treasury’s controversial new proposed rules to curb tax avoidance. USCIB and other groups have argued the new rules would harm common business structures.

“If it were a targeted rule, the companies wouldn’t be going nuts the way they are,” said Carol Doran Klein, USCIB’s vice president and international tax counsel. “It hits virtually everything they do.”

Read the entire article.

USCIB Tax Conference Tackles BEPS Implementation

Published on June 8, 2016
IRS Commissioner John Koskinen
IRS Commissioner John Koskinen

Hundreds of policymakers, business executives, OECD officials and tax professionals gathered at the Four Seasons Hotel in Washington, D.C. on June 6 and 7 for USCIB’s flagship OECD International Tax Conference. Every year the conference draws global companies and those involved in crafting international tax policies, with this year’s discussion focusing on the global effort to implement the OECD’s controversial Base Erosion and Profit Shifting (BEPS) project. After three years of negotiations, BEPS concluded last year with governments developing a framework for modernizing international tax rules. Countries will now turn toward the challenging task of implementing the BEPS recommendations.

Organized by USCIB, the OECD and the Business and Industry Advisory Committee (BIAC) to the OECD, the annual tax conference gives members of the tax community a timely opportunity to discuss the OECD’s international tax initiatives and their impact on global trade and investment. Keynote remarks were delivered by U.S. Internal Revenue Service Commissioner John Koskinen, who provided the U.S. perspective on global tax cooperation.

The conference kicked off with opening remarks by Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, who told the audience we are living in an inclusive “post-BEPS world” in which all countries are invited to participate on equal footing in implementing the new tax rules. He explained that the world needs tax policies that lead to inclusive growth, which will in turn create tax certainty.

“Ahead of us we have a more relaxed debate,” Saint-Amans said. “BEPS is going to be implemented, but we can do it in a balanced manner with a forward-looking agenda geared toward inclusive growth.”

US perspective on global tax cooperation

During the keynote address, Koskinen attributed the breakneck changes that have occurred in global tax policy to the “willingness of governments everywhere to come together and work collaboratively on common goals.” He supported the goal of the BEPS project to eliminate incidences of tax avoidance, and also reiterated that actions taken to improve tax compliance must not impede global commerce. As such, he said clear and consistent tax laws and regulations are necessary.

From the perspective of a tax administration, Koskinen explained that addressing base erosion requires an efficient and secure automatic exchange of information as well as effective measures to resolve disputes related to tax treaties in a timely manner. He noted that the OECD’s common reporting standard is based on the U.S. Foreign Account Tax Compliance Act (FATCA), which requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. He said America’s experience with FATCA can help inform the OECD’s common reporting standard, and that the challenge for tax administrations is to obtain and exchange tax information in a secure manner and to only use that data for tax purposes.

There is much the United States can contribute to the common reporting standard (CSR), but Congress has yet to pass legislation allowing the U.S. to sign on to the CRS. He called on Congress to act.

“U.S. participation in this standard is critical to ensuring that reporting is as straightforward and as seamless as possible for financial institutions and companies in the U.S.,” He said. “Therefore, I will continue to urge Congress to enact this legislation as quickly as possible.”

On country-by-country reporting, Koskinen said that the United States has been receptive to the business community’s concerns. The country-by-country reporting system went into effect on January 1, 2016, but the U.S. regulations designed to comply with this system will only apply to tax years beginning on or after July1, 2016, meaning that under the OECD’s requirements the first reports will be due several months before they will be due under U.S. regulations.

“I want to assure everyone that we understand the concerns expressed by the business community about the difficulties that this gap period poses for U.S.-based companies,” he said. “We are considering alternative methods for receiving submissions for the gap period, which could include some system of voluntary reporting. We are coordinating with other countries to try and make sure that voluntary filing will work.”

He concluded that although there is much work left to be done, the high level of political support for addressing BEPS is heartening.

“Given the spirit of cooperation and collaboration that exists among governments in this effort, I remain confident that we will achieve our goals,” he said.

Read commissioner Koskinen’s remarks

How can global tax policy spur international investment and trade?

Dealing with tax uncertainty was a recurring theme throughout the conference. The goal of the BEPS project is to coordinate national tax rules to avoid harmful tax practices, thereby removing uncertainty and spurring international investment and trade, which lies at the core of the OECD’s tax work.

L-R: Pascal Saint-Amans (OECD), Robert Stack (U.S. Treasury), Marty Sullivan (Tax Analysts), Will Morris (BIAC), Pam Olson (PwC)
L-R: Pascal Saint-Amans (OECD), Robert Stack (U.S. Treasury), Marty Sullivan (Tax Analysts), Will Morris (BIAC), Pam Olson (PwC)

Panelists discussed which policies countries should adopt to help reduce tax uncertainty. Will Morris, chairman of the BIAC Committee on Taxation and Fiscal Affairs, shared the findings of a survey aimed at defining tax uncertainty. The survey revealed that the top five tax uncertainty factors for businesses are unpredictable or inconsistent treatment by a tax authority, retroactive changes to legislation, frequent changes to the statutory tax system, complexity of the tax code and a poor understanding of the tax code by tax authority. Morris explained that these factors have a serious negative impact on a business’s decision to invest. Faster audits and the timely resolution of cross-border disputes were suggested as ways to increase certainty.

To deal with tax uncertainty, speakers agreed that businesses need to make the case for the importance of foreign direct investment (FDI) and its connection to broader tax issues, so that governments understand they must do more to attract FDI.

“Business doesn’t exist for the purpose of paying taxes,” said Pam Olson, U.S. Deputy Tax Leader & Washington National Tax Services Leader at PricewaterhouseCoopers. In the long term, tax policies that encourage businesses to invest rather than simply seize revenue will be better for inclusive growth.

Panelists also highlighted the importance of building trust. Olson noted that there needs to be more dialogue between businesses and governments on taxation, which would go a long way towards increasing tax certainty. Robert Stack, deputy assistant secretary for International Tax Affairs at the U.S. Treasury, agreed and said that “trust among governments is critical” as well. There is a danger that some countries will take the OECD’s BEPS recommendations as a baseline for their tax laws and then go above and beyond the recommendations. Stack said that such behavior would undermine global trust in the BEPS project.

Inclusive implementation 

Over the course of the BEPS project, the OECD has been incrementally increasing input from developing countries. BEPS implementation provides an opportunity to secure political support in developing countries to increase their tax administration resources. To help developing countries take a more active role in BEPS work, the OECD has developed toolkits and an initiative with the United Nations called Tax Inspectors Without Borders.

James Karanja, head of the Tax Inspectors Without Borders initiative, explained the goals of his project: transfer tax audit knowledge and skills to tax administrations through a “learning by doing” approach; deploy experts to work directly with local tax officials in current audits; ensure greater consistency in application of rules creating greater certainty for taxpayers; and increase revenues.

Stack noted that policymakers need to think outside the box when applying the BEPS action plan to developing countries, and all speakers agreed that everybody benefits when developing countries enjoy a sustainable tax base, effective tax administrations and rule of law.

During the second day of the conference, participants explored in detail several outstanding items and unfinished initiatives that need to be addressed in order for BEPS implementation to proceed, including permanent establishments, transfer pricing, interest deductibility and the OECD’s effort to create a multilateral instrument to enable countries to swiftly amend their bilateral tax treaties to implement treaty-related BEPS recommendations.

Read the full program