Strategizing International Tax Best Practices – by Keith Brockman

The Tax Foundation has provided a useful reference to state law changes, as 35 states have major tax changes taking effect on 1/1/2020.

This is especially important as more states are still interpreting the Tax Act, and any impact for GILTI, Sec. 163(j) interest limitation, etc.

The reference provides a summary by state of the recent law changes and details.

https://files.taxfoundation.org/20200102161647/State-Tax-Changes-as-of-January-1-20201.pdf

The German Federal Minister of Finance has published a draft law, implementing the EU anti-tax avoidance directive.  However, the legislation is very far-reaching!  Although the provisions are still draft, there are 2020 effective dates.

Highlights

  • Eliminates current TP hierarchy for methods
  • Looks at conduct, vs. contracts
  • Codifies function and risk analysis
  • Best method rule
  • Legal definition of “intangibles”
  • DEMPE implementation
  • Intangible price-adjustment clause
  • Addresses transfer of functions valuation
  • Deductibility of German interest expense
  • Expands related party definition
  • Reduces turnover amount to prepare a TP Master File
  • Codifies APA processes

Deloitte’s TP Alert provides additional details:

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-global-transfer-pricing-alert-19-037-20-december-2019.pdf

HAPPY NEW YEAR

May the Year 2020 bring a fresh start, new aspirations and inspiring successes!

Thank you for your continued interest, suggestions and comments, which are very much appreciated.  Have a fantastic 2020!

OECD has published the December 20109 update for implementation of country-by-country reporting (CbCR).

The table of contents conveniently provides the date for the updating of the relevant sections.  The local filing section indicates a December 2019 update.

The guidance link is referenced for review.

http://www.oecd.org/ctp/guidance-on-the-implementation-of-country-by-country-reporting-beps-action-13.pdf

OECD: Tax ruling exchange

The OECD/G20d BEPS Project has published: Harmful Tax Practices – 2018 Peer Review Reports on the Exchange of Information on Tax Rulings, referenced herein.  This is the third annual peer review of the transparency framework. It covers individual reports for 112 jurisdictions, including 20 jurisdictions reviewed for the first time.

The transparency framework requires spontaneous exchange of information on five categories of taxpayer-specific rulings: (i) rulings related to certain preferential regimes, (ii) unilateral advance pricing arrangements (APAs) or other cross-border unilateral rulings in respect of transfer pricing, (iii) rulings providing for a downward adjustment of taxable adjustment of taxable profits (iv) PE rulings and (v) related party conduit rulings.

The requirement to exchange information on the rulings in the above categories includes certain past rulings as well as future rulings, pursuant to pre-defined periods which are outlined in each jurisdiction’s report and that varies according to the time when a certain jurisdiction has joined the Inclusive Framework or has been identified as a Jurisdiction of Relevance. The exchanges occur pursuant to international exchange of information agreements, which provide the legal conditions under which exchanges take place, including the need to ensure taxpayer confidentiality.

 

https://www.oecd-ilibrary.org/docserver/7cc5b1a2-en.pdf?expires=1577490104&id=id&accname=guest&checksum=E74BCF40FC3C25437B469E07971C928B

Demonstrating Leadership

As New Year approaches, with KPI’s being reviewed for 2019 and new ones formed for 2020, these tips are especially relevant for everyone.

My observations: As a technical career starts, the emphasis is on technical, although any career needs leadership goals at any level and this is an excellent time to start.  As a career progresses, leadership skills become more important, providing promotion opportunities as leadership traits are sought by others, with a complement of prior learned technical skills.  

Lynn Szostek, PhD, Capella MBA faculty, shares her tips on how to best demonstrate leadership.  The ideas, and referenced links to additional tips from Capella University, are excellent reference materials and actions for New Year resolutions.

1. Be a thought leader

Get a reputation for knowing your stuff and being on the leading edge of your industry. That might sound like a tall task, but don’t worry. You can do this in stages.

  • Curate content: Share relevant news articles, case studies, and other publications via Twitter or LinkedIn using relevant hashtags for your industry. Be careful to provide context for what you share. Add value by introducing the article with some commentary or opinion of your own. Also, interact with comments on your posts or on similar posts from other people. (As a Capella student, you can practice this step in our MBA Central online hub, where professors and students share ideas and have conversations.)
  • Create content: After curating content for a while, you’ll start to have your own ideas about trends in your industry. Share them! Start a blog, publish a case study, or contribute to an industry publication.
  • Speak at events: Once you’ve established yourself as a thought leader by curating and creating content, you can start exploring speaking opportunities. This could include being a guest on a webinar, a panelist at a local industry meeting, or a keynote speaker at a national conference.

2. Join a professional association

Get involved with a professional association in your industry by attending meetings, networking with members, and perhaps serving on the board. Talk about what you learn from the association with your colleagues and encourage them to get involved, as well.

Not sure where to start? You should be able to find several organizations by doing an internet search for your industry plus the term “professional association.” Start out by attending events and find ways to get more involved. Build your leadership skills by volunteering to head up a committee or organize an event.

3. Look at the big picture

It’s easy to get stuck seeing things from the limited view of your position. Looking at things from the larger lens of the company can help you make better decisions and understand difficult changes.

For example, let’s say the supply chain department of a hospital elects to contain costs by reducing the amount of inventory on hand. This saves up-front money, sure, but the increased time it takes to replenish supplies results in inventory holes, which greatly impacts patient care. Looking at things from a company perspective, you’d quickly realize that one cost-saving measure in the supply chain is not worth the larger cost of reduced patient care for the entire hospital.

Another way to consider the big picture is by observing other industries for ideas. Whoever looked at fast food drive-throughs and thought “Hey, what if we did that in our retail pharmacies?” was really demonstrating leadership and creative problem-solving.

4. Think positively and proactively

When a project doesn’t go as planned, leaders don’t dwell on what went wrong. They also don’t get caught up in office politics or spend their lunch hour gossiping with the Negative Nellies. They proactively seek a solution.

Be sure to set a good example for your colleagues by being optimistic. People like to be around positive people. They want to be excited about their jobs. Help create a positive, proactive atmosphere at the office.

Ways to do that include:

  • Be solution-oriented: When something goes wrong, talk about how to resolve the problem and brainstorm how to do it better next time. Come up with solutions together.
  • Be excited: When a new initiative comes up that requires hard work and change, talk up the benefits with your team. Move in a direction with positivity, and they will follow.
  • Be encouraging: When a coworker goes above and beyond or helps execute a project, give credit where credit is due. Empower your peers with positive encouragement.

5. Listen to and learn from others

Good leaders don’t tell. They listen. Listening to and observing others is a great way to get ideas and gain perspective. Listen to your coworkers, your boss, your peers, your customers, and the overall marketplace. By understanding the perspectives of others, you get a better understanding of the big picture and the challenges at hand. Listening opens yourself up to new ideas.

6. Network with purpose

Networking can help you find opportunities for advancement and hone your leadership skills. Get involved in professional associations, attend conferences, and find other ways to meet people in your industry.

When you attend a networking event, your goal should be for quality over quantity. In other words, handing out 100 business cards isn’t as successful as having 5 solid conversations. The best connections are purposeful. True leaders will identify a way in which to work together or connect again in the future.  Their success is not in how many people they know but in how well they know those people.  Get tips for successful networking.

7. Find a mentor

Simply put, a mentor is a more experienced person who shares professional knowledge and career experiences with you, the mentee. The goal of a mentoring relationship is to gain insight and advice from your mentor to develop your own leadership skills and advance your career goals.

A mentor can be someone in your company or in another company. They can even be in another industry, depending on what you’re seeking to learn. Learn how to find a mentor.

8. Embrace diversity

Fostering diversity in the workplace takes attentive leadership. Good leaders understand that diversity goes beyond age, gender, race, ethnicity, and sexual orientation to include diversity of personalities, ideas, and approaches. Encouraging differing viewpoints among your peers in team meetings can create breakthroughs and true ah-ha moments.

9. Master your job

This may seem like a no-brainer, but none of these ideas will make you a leader if you’re not nailing your own job. Nobody will respect you if you’re spending all your time networking and demonstrating thought leadership while turning in projects late or doing a messy job of it. You must do your work on time and with aplomb while getting involved in your industry and building your leadership credibility.

10. Understand and build upon your strengths

Many companies use personality assessments like Myers-Briggs and StrengthsFinder. These are great tools to help you understand how you approach problems and interact with others.

In Capella’s MBA program, we go beyond those assessments with leadership coaching. Through this program, you not only learn what your strengths are, but how to best use them to develop your leadership style and enhance your management skills. The leadership program provides you with a lifelong growth mindset to help you continuously improve and develop.

In the end, everyone is born a leader. Our success is determined by how we develop our skills, share our knowledge, empower others, and continuing learning.

 

VAT refund: EC steps in

This is a very interesting case and would seem to form precedence for EU Member States and taxpayers in a similar situation, resulting from a request for a preliminary ruling to the EC from the Supreme Administrative Court, Czech Republic and the Kingdom of Spain also submitted written observations.

 Are tax authorities able to defer the refund of the total amount of excess VAT even though only a small part is still the subject of an ongoing tax inspection? The tax authorities and the Commission believe so, arguing that the deduction under Article 179 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) is to be made only from the total amount.

 This question is particularly sensitive because the part of the claimed deduction still to be investigated might be connected with a third party’s fraudulent transactions, about which the taxable person possibly should have known. According to the Court’s case-law, this would permit (or require) the tax authorities to refuse the deduction in this regard.  But does this also mean that the deduction in respect of other indisputably ‘legitimate’ transactions can be deferred for several years?  Theoretically, the inspection of a single transaction to the value of one euro could therefore defer the tax assessment for all other transactions for several years. 

It can be stated, as an interim conclusion, that Articles 179, 183 and 273 of the VAT Directive do not include a right for the Member States to limit in time the total amount of excess VAT if only part of it is disputed, while the other part is undisputed.

http://curia.europa.eu/juris/document/document.jsf?text=&docid=221824&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=953875

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