WEEKEND INSIGHTS: Mandatory Disclosure and No Shared Purpose

This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners, featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, Daily Tax Report: International, and Financial Accounting.

This week we look at mandatory disclosure rules in the EU and Mexico, the OECD’s missing shared purpose, country-by-country reporting, and New York’s minimalist discovery.

• Kimberly Tan Majure, Armando Lara Yaffar, and John DerOhanesian of KPMG on mandatory disclosure rules adopted by the EU and Mexico
• Jeff VanderWolk of Squire Patton Boggs on the lack of a shared purpose in the OECD’s two tax pillars on digitalization
• Keith Brockman on country-by-country reporting
• Open Weaver Banks, Ted Friedman, and Michael Hilkin of Eversheds Sutherland on New York’s minimalist tax litigation discovery rules
• Marina Vishnepolskaya on the proposed carried interest regulations
• Jasen Hanson and John Hackney of Chamberlain Hrdlicka on the tax aspects of partnership bankruptcies

Mexico recently introduced mandatory disclosure rules regarding cross-border tax arrangements.

Photographer: Ulises Ruiz/AFP via Getty Images

The Organization for Economic Cooperation and Development’s base erosion and profit shifting project aims to restrict perceived aggressive tax planning by multinational enterprises. Kimberly Tan Majure, Armando Lara Yaffar, and John DerOhanesian of KPMG examine the global transparency provisions in BEPS Action 12 – Mandatory Disclosure Rules as adopted by the EU and Mexico. Read: Mandatory Disclosure Rules in the European Union and Mexico

The OECD is expected next month to officially release its draft blueprints for Pillars 1 and 2 of the multilateral program for the digital economy. Jeff VanderWolk of Squire Patton Boggs sees a project where the 137 participants with differing views fall roughly into three camps, all lacking a shared purpose. Read: The OECD’s Two Tax Pillars on Digitalization—A Multilateral Project in Search of a Shared Purpose

The evolution of international tax transparency is inevitable, and right in the middle of that evolution is the country-by-country reporting standard. Keith Brockman describes the origins of CbCR and what to expect next. Read: Country-by-Country Tax Reporting: Nearly 20 Years in the Making

New York has unique discovery rules for tax litigation that, albeit minimalist, may benefit taxpayers by reducing the discovery burden. Open Weaver Banks, Ted Friedman, and Michael Hilkin of Eversheds Sutherland look at some recent administrative decisions. Read: New York Slice: New York’s Minimalist Approach to Discovery in Tax Matters

Treasury and the IRS released proposed regulations for carried interest this summer. Marina Vishnepolskaya walks through key concepts in the proposed regulations affecting fund investors, sponsors, and executives in the private equity space. Treasury and the IRS responded in the proposed regulations to certain concerns in the private equity community. Read: Overview of Proposed Carried Interest Regulation

A partnership’s bankruptcy might help the partnership, but it could leave the partners in a difficult position. Jasen Hanson and John Hackney of Chamberlain Hrdlicka explain how partners could end up owing tax on canceled debt. Read: Partners Beware: How Bankrupt Partnerships May Pass on Liabilities to Individual Partners

Corporate Tax Chat

Bloomberg Tax caught up with Jimmy Spencer, chief financial officer and whole-time director for Chemtex Group Companies in India.

Chemtex is involved in building refineries and petrochemical plants, as well as providing design and engineering services in the field of petroleum, petrochemical, and chemical plants globally. Spencer shares his holistic view of India’s tax system, caught between the red tape of the past and the ambition for a digital future. Read: Corporate Tax Chat: Jimmy Spencer of Chemtex Group Companies

From the Archive

Bloomberg Tax contributors are facing the challenges and additional workload in their practices and have been sharing their observations.

DAC6, the EU’s new international tax reporting mandate, comes with many unknowns for taxpayers and their advisers. Among these unknowns are how different jurisdictions will interpret five categories of hallmarks subject to disclosure. Keith Brockman explained what a hallmark is and why the first two are particularly worrisome.

Oliver R. Hoor of ATOZ Tax Advisers analyzed interpretation issues in relation to the mandatory disclosure regime, and advocates a reasonable approach that is consistent with the purpose and objectives of DAC6.

In an important policy reform, Mexico has adopted mandatory disclosure requirements for tax advisers and taxpayers, as discussed by Terri Grosselin, Fernando Junco, and Sabrina Hernandez Schetelich of Ernst & Young Mexico.

Beyond Tax

What’s happening outside the world of tax?

The presidential debate shouting match started during the first question about the U.S. Supreme Court. Term limits for justices would reduce the political antagonism of the appointments process, Gabe Roth, head of Fix the Court, says. A new House bill calls for future justices to serve for 18 years and retired justices to fill in from the time an unexpected vacancy occurred until a new justice was confirmed. Read: Supreme Court Term Limits Could Reduce Gamesmanship, Shouting

The Department of Labor’s proposed exemption from rules that would allow more latitude for financial professionals who advise plan participants about retirement account investments doesn’t align with other federal and state standards, according to James F. Jorden, partner with Faegre Drinker Biddle & Reath LLP. Jorden suggests revisions to allow the marketplace to provide equal access to both annuities and securities, better serving to protect and benefit the public. Read: DOL ‘Best Interest’ Proposal Not Aligned With Federal, State Rules

A recent Commodity Futures Trading Commission subcommittee report calls for a coordinated effort by federal regulators, including the CFTC and SEC, to measure, understand, and address the financial risks presented by climate change. Kirkland & Ellis LLP attorneys say the recommendations were unanimous, but legislative action is needed to move it forward. Read: CFTC Panel Calls for Sweeping Climate Change Risk Regulation

Making the jump from BigLaw partnership to in-house counsel has its challenges during normal times, but doing so in the middle of a pandemic ups the ante, says Joseph Moreno, new general counsel for SAP NS2. He shares the differences between the two positions, thoughts on managing departments and not associates, and his networking strategy in the remote work reality. Read: Leaving BigLaw and Transitioning to In-House in a Pandemic

The pandemic is putting extraordinary home and work stresses on all employees, including attorneys. Elizabeth Holt Andrews with Troutman Pepper and Andrew Trask with Williams & Connolly LLP say that whether attorneys are in the midst of contentious litigation or protracted contract negotiations, they should consider unseen burdens colleagues may be carrying and showcase the profession’s commitment to civility. Read: Professional Civility Is Essential in the Pandemic

Exclusive Content for Bloomberg Tax Subscribers

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On July 23 the Treasury Department published the final global intangible low-taxed income (GILTI) regulations that exclude from a controlled foreign corporation’s gross tested income certain items that are subject to an effective rate of foreign tax greater than 18.9% under current law. Jose E. Murillo and Craig Hillier of Ernst & Young LLP identify and discuss select issues.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact Erin McManus at emcmanus@bloombergtax.com.