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20 April 2018 Report on recent US international tax developments – 20 April 2018 The European Union (EU) is continuing its deliberations on whether certain elements of US tax reform, such as the base erosion and anti-abuse tax (BEAT), the global intangible low-taxed income (GILTI) provision, and the deduction for foreign-derived intangible income (FDII), constitute preferential tax regimes or result in an unfair trade practice. The tax press this week reported that the EU Council's High Level Working Party (Taxation) was scheduled to hold a meeting on 18 April to discuss the outcome of the Organisation for Economic Co-operation and Development's (OECD's) Forum on Harmful Tax Practices (FHTP) meeting on 4 April. The OECD's FHTP meeting, initiated at the request of the EU, began its review of BEAT, GILTI, and FDII. The United States (US) reportedly presented its case on US tax reform at the FHTP meeting. The next FHTP meeting is scheduled for October, but it is unclear if any final decision by the panel will be made at that time. Pascal Saint-Amans, Director of the OECD's Centre for Tax Policy and Administration, also commented this week on the enactment of US tax reform, during a keynote address at a European tax conference. Saint-Amans was quoted as saying that a number of the provisions in the Tax Cuts and Jobs Act appear to implement many of the outcomes of the OECD's Base Erosion and Profit Shifting (BEPS) project, a result he found somewhat surprising given what he described as the US Government's objection to the BEPS project. The OECD Director pointed to US tax reform's hybrid mismatch as an example. As far as BEAT goes, Saint-Amans characterized it as a form of rough justice that was enacted by the US as a backstop to transfer pricing rules that the US Government considers may not be up to the task of preventing base erosion and profit shifting. Document ID: 2018-5552 |
