Strategizing International Tax Best Practices – by Keith Brockman

Archive for March, 2019

US developments/OECD toolkit

Recent international tax developments include the following:

  • OECD is progressing on a Digital Strategy, with planned consensus in 2020 (hopefully separate countries will have added patience for a coordinated approach)
  • US Previously Taxed Income (PTI) regulations are due this summer/fall
  • Foreign Account Tax Compliance Act (FATCA) final regulations were issued, effective March 2019 and expanding the definition of “responsible person”
  • India and the US reached agreement to exchange Country-by-Country (CbC) reports, thus alleviating any need to provide separate India CbC reports for US taxpayers
  • OECD released a Beneficial Ownership Toolkit (reference attached) to assist developing countries in identification of ultimate beneficial owners

EY’s Global Tax Alert is also attached for reference.

http://www.oecd.org/tax/transparency/beneficial-ownership-toolkit.pdf

https://www.ey.com/Publication/vwLUAssets/Report_on_recent_US_international_tax_developments_-_22_March_2019/$FILE/2019G_000806-19Gbl_Report%20on%20recent%20US%20international%20tax%20developments%20-%2022%20March%202019.pdf

UK Spring Statement: Pay your fair share

The UK Chancellor’s Spring Statement was announced on March 13, 2019 with a focus on the following:

  • Making Tax Digital, a light approach to penalties for companies striving to comply
  • Digital Services Tax; companies should pay their fair share (also a theme when the Diverted Profits Tax was announced)
  • Depreciation allowances
  • A policy paper re: HMRC’s approach to tax avoidance, evasion and other…

Additional consultations will follow, including the Digital Services Tax planned for April, 2020.

As the UK is still negotiating its entrance into, or exit from, Brexit, these developments will be especially important.

EY’s Global Tax Alert provides details for reference:

https://www.ey.com/Publication/vwLUAssets/UK_Chancellor_announces_Spring_Statement/$FILE/2019G_000796-19Gbl_UK%20Chancellor%20announces%20Spring%20Statement.pdf

TCJA parking non-deductibility; TEI offers valuable insight/safe harbors

IRS Notice 2018-99, published on Christmas Eve, has created quite a controversy in its short history for creating non value-added work in extricating costs of a company’s (leased or owned) parking facilities for which a federal tax deduction would not be allowable.  The Notice and TEI’s letter are attached for reference.

TEI’s timely letter expresses the history of this provision, and most importantly the inordinate amount of work, legal fees, etc. that would be involved pursuant to the Notice.

Two safe harbor provisions are suggested for implementation; Owned facilities $100 per parking spot per directly attributable expenses, and leased facilities would use 5% of the rent as the deemed amount subject to disallowance.

It is hopeful that IRS will quickly respond to current controversy and adopt such harbor provisions, or similar provisions, to avoid significant costs involved in preparing the 2018 federal income tax returns.  

https://www.irs.gov/pub/irs-drop/n-18-99.pdf

https://www.tei.org/sites/default/files/advocacy_pdfs/TEI%20Comments%20on%20Notice%202018-99_FINAL_2.22.19.pdf

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