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Tag Archive for Multinationals

IRS Crack Down On Foreign Tax Credits For U.S. Multinationals

Ronald Marini

The U.S. Department of the Treasury revealed on September 15, 2016 that it is drafting rules to curb U.S. Multinationals from obtaining U.S. foreign tax credits as a result of foreign government’s audits resulting in foreign tax adjustments for U.S. Multinationals.

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IRS Issues IPUs For CFCs & Subpart F Income, Which State Their Subpart F Audit Positions!

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On October 13, 2015 we posted LB&I Agents Lose Autonomy To Centralized Office That Will Be Using Data to Identify Compliance Risks For Audit!, where we discussed that tax practitioners will face new questions from examination teams as the IRS selects compliance risks based on data, in the Large Business and International Division’s (LB&I) move from individual audits of multinationals to broader considerations involving risk assessment.

While LB&I is scheduled to implement the new structure in early calendar year 2016, in recently released new International Practice Units (IPUs), the IRS has provided additional guidance to its examiners on the audit of foreign base company sales income (FBCSI), a category of subpart F income. These IPUs focus on supply chain structures with foreign sales and/or manufacturing branches (including disregarded entities) that may be used by U.S. multinationals to avoid the application of the FBCSI rules. Read more

LB&I Agents Lose Autonomy To Centralized Office That Will Be Using Data to Identify Compliance Risks For Audit!

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Tax practitioners will face new questions from examination teams as the IRS selects compliance risks based on data, in the Large Business and International Division’s (LB&I) move from individual audits of multinationals to broader considerations involving risk assessment.

As opposed to the exam team coming out and identifying what areas will be looked at; the issues will be per-identified for  the revenue agent. This change shifts the responsibility of selecting items to examine in an audit from the field agents to the revenue agents who are analyzing data in a centralized office. Exam teams will however, have the ability to raise other issues not identified from the data. LB&I Commissioner Douglas W. O’Donnell said that LB&I will be reorganizing its exam structure to save resources and create a more Read more

Corporate Tax Professionals Surprised By Stunning “Spans & Layers” Report By Bain & Company

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After thirty years consulting to tax executives of multinationals, I have been fortunate to witness trends emerging behind the scenes long before corporate tax professionals ever see them. Stunning new trends will take corporate tax organizations by surprise in 2015 and beyond. Having built many trusted relationships consulting with tax executives over three decades, my goal is to protect tax professionals now and in the future from these trends with an awareness of what is happening behind the scenes and how to position yourselves in an ever changing market. These days, I find myself in an interesting position having founded two organizations focused on helping tax professionals make better connections with the people searching to find them. Corporate tax professionals I know well, having placed thousands of tax experts over a span of thirty years into corporate tax Read more

Australian Tax Office Is Probing 86 Multinationals

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Pat McGrath of Australia’s national broadcaster ABC News reports that “About 100 Tax Office staff have begun a four year investigation into the tax affairs of big companies global companies operating in Australia.” (sic)

In an interview with Pat McGrath, Mark Konza (ATO Deputy Commissioner) said: “At the moment – and I should say this process is ongoing, so other cases will be identified over time – these 86 cases where we felt that the structuring events that had taken place seem to have a very bad effect on a company’s Australian tax position…”. Deputy Commissioner Konza continued, “We will issue assessments on companies that we think weren’t applying the law correctly. If they’re involved in profit shifting, they’ll get an assessment; they’ll get penalties as well.” Read more

India Tax Planning – Multinationals Should Act Before May 31, 2013

Multinationals with operations in India have only until May 31, 2013 to act before a newly proposed provision in India’s Finance Bill will affect their tax planning.

Private companies operating in India typically resort to a buyback of its shares instead of payment of the dividends to avoid a dividend distribution tax, particularly where the capital gains arising to the shareholders are either not chargeable to tax or are taxable at a lower rate.

The Union Budget 2013 includes a provision that, effective June 1, 2013, an additional tax — at a rate of 20% (plus applicable surcharge and cess levy) — would be imposed on any amount distributed by an Indian company with respect to the buy-back of unlisted shares.

In other words, this tax would be imposed on the distributed income of the Indian company. This income would not be Read more

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