Feature of the Week—Global Focus on MNE Base-Stripping.
There is nothing new about a focus on base erosion anxiety, or MNE effective tax rate planning, which has been building for many years. Indeed, much of the spread of transfer pricing documentation to more than 70 countries over the years has been a result of tax base defense considerations relating to MNE transfer pricing policies. As the base erosion focus matures, it is important to address foundational questions, which we will do in a series of “Features” beginning this week.
U.S. Administrative Developments—FATCA: Latest Issues.
IRS announced that it would strive to keep FATCA intergovernmental agreements consistent in terms of substance and procedure.
U.S. Administrative Developments—Foreign Tax Credit/Covered Asset Acquisition Regs. on the Way.
IRS officials said that long-awaited Regulations under Section 901(m) (denial of foreign tax credit with respect to foreign income not subject to United States taxation by reason of covered asset acquisitions) will be issued soon. The rules will address overlap with Section 909 (suspension of taxes and credits until related income taken into account) and situations where there is an effort to separate credits from the underlying income. Code Sec. 901(m) ; Code Sec. 909
U.S. Administrative Developments—Foreign Partnership Guidance Forthcoming.
A Treasury official said that IRS is working on two pieces of guidance for foreign partnerships—one on foreign currency and qualified business units under Section 987, and the other on CFCs as members of foreign partnerships for purposes of the repatriation provisions of Section 956. Code Sec. 987 ; Code Sec. 956
U.S. Treaty and Competent Authority Developments—Advance Consultation Guidance.
Michael Danilack, Deputy Commissioner (International) in the IRS Large Business and International (LB&I) Division, said that forthcoming Competent Authority guidance, updating existing procedures, will formally address a process for MNEs to consult with the U.S. Competent Authority when it feels that a foreign tax authority is taking inappropriate positions.
Thomson Reuters/WG&L International Tax Title of the Week.
“U.S. Administrative Developments“ above reports on forthcoming Regulations under foreign tax credit Sections 901(m) and 909. The WG&L treatise Foreign Tax Credits by Richard E. Andersen provides a comprehensive description of the U.S. FTC system and the issues that it raises for investors and enterprises. Foreign Tax Credits includes practical discussions on the creditability of foreign taxes, eligible taxes and taxpayers, country-specific analyses, and comprehensive coverage of the Section 904 limitation. To order Foreign Tax Credits, call 1-800-431-9025, option 1, or visit www.ria.thomsonreuters.com. Andersen: Foreign Tax Credits ¶ 1.03