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, and Daily Tax Report: International.
This week we look at the complex contraption proposed in the OECD draft blueprints for Pillars 1 and 2, the challenges and opportunities in buying a business in the Covid-19 recession, Trump’s payroll tax deferral, U.S. inbound recovery through transfer pricing, and more. We’ll hear from:
- Jeff VanderWolk of Squire Patton Boggs on the unnecessarily complicated provisions of the draft blueprints for the OECD’s Pillars 1 and 2
- Christopher Hanewald of Wyatt, Tarrant & Combs on the roadblocks for would-be buyers of PPP loan borrowers
- Jason Menghi of Deloitte LLP on the opportunities for private equity to aid in the recovery
- Kyle Pomerleau of the American Enterprise Institute on why Trump’s payroll tax deferral is unlikely to achieve its intended goals
- Alan Lederman of Gunster, Yoakley & Stewart P.A. on using newly built condominiums to generate qualified opportunity fund benefits
- Aydin Hayri, Manoj Raj, and Jamie Hawes of Deloitte LLP on how U.S. inbound companies can recover and thrive
- Matthew Kramer, Steven C. Wrappe, and Matt Piper of Grant Thornton LLP on trends in advance pricing agreements
- Anna Soubbotina and Gary Chan of Charles River Associates on the OECD’s data indicators on tax authorities’ audit practices
- Karnik Gulati of Coinmen Consultants on the UN proposal for the taxation of the digital economy
- KPMG practitioners on how multinationals can review and update their transfer pricing in situations in the Asia-Pacific Region and EU
- Andy Spencer of Accordance on the proposed VAT measures in the EU Package for Fair and Simple Taxation
- Duff & Phelps transfer pricing practitioners on the transactional net margin method in Brazil
The Organization for Economic Development’s (OECD’s) draft blueprints for the reallocation of non-routine multinational business profits in favor of market countries (Pillar 1) and a global minimum tax regime (Pillar 2) are long and complicated. Jeff VanderWolk of Squire Patton Boggs compares them to a Rube Goldberg machine. Read: The OECD’s Draft Blueprints For Pillars 1 and 2—Rube Goldberg Lives On
Paycheck Protection Program loan forgiveness uncertainty is causing problems for parties beyond the business owners seeking forgiveness. Christopher Hanewald of Wyatt, Tarrant & Combs highlights how the uncertainty is impeding the efforts of would-be buyers of such businesses. Read: Paycheck Protection Program Forgiveness Uncertainty Stymies Deal-Making
Private equity firms can play an essential role in our economic recovery, but are they ready to come off the sidelines? Jason Menghi of Deloitte looks at the capabilities and opportunities for private equity to put roughly $1.5 trillion to work. Read: Private Equity Can Play an Essential Role in Economic Recovery
President Trump signed executive memoranda allowing firms to defer withholding payroll tax. Kyle Pomerleau of the American Enterprise Institute explains why the deferral is unlikely to achieve its intended goals. Read: Trump’s Payroll Tax Deferral Won’t Provide the Assistance the Economy Needs
A company created to buy and rent out newly built condominiums could generate qualified opportunity fund benefits. Alan Lederman of Gunster, Yoakley & Stewart P.A. looks at pre-opportunity zone guidance and case law to explain how. Read: Buying Unsold Condominium Inventory In The Opportunity Zone
The Covid-19 downturn has upended the carefully constructed tax planning of many U.S. inbound taxpayers. Aydin Hayri, Manoj Raj, and Jamie Hawes of Deloitte highlight some key transfer pricing considerations related to the potential impact of the pandemic on foreign-based multinational enterprises operating in the U.S. Read: Transfer Pricing—How U.S. Inbound Companies Can Recover and Thrive During Covid-19
Transfer pricing has never been a static field, and recent global trends have significantly increased the uncertainty inherent in establishing appropriate intercompany pricing. Matthew Kramer, Steven C. Wrappe, and Matt Piper of Grant Thornton LLP examine the transfer pricing trends that are making advance pricing agreements look more like a necessity than a luxury. Read: Current Trends in U.S. Advance Pricing Agreements
In the first of a two-part article, Anna Soubbotina and Gary Chan of Charles River Associates draw on survey data in the OECD’s recently published annual Tax Administration report and look at select data indicators on tax authorities’ audit practices. Read: New OECD Data—Practical Insights for Managing Transfer Pricing Risk—Part 1
Karnik Gulati of Coinmen Consultants discusses the United Nations proposal for taxing the digital economy, which provides a source-based taxation rule similar to the existing passive income articles in the model tax conventions. Read: United Nations Proposal on Taxing the Digital Economy
KPMG practitioners discuss how multinationals can review and update their transfer pricing in situations where a range of disruptive events caused by Covid-19 presents challenges to their systems. Read: Transfer Pricing Implications of Covid-19 for the Asia-Pacific Region and the EU
It is clear that there will be considerable changes to how businesses account for VAT in the EU in the coming years. Andy Spencer of Accordance discusses the proposed measures in the Package for Fair and Simple Taxation. Read: VAT Aspects of the EU’s Package for Fair and Simple Taxation
Duff & Phelps transfer pricing practitioners outline practical considerations for implementing the Organization for Economic Cooperation and Development’s transactional net margin method (TNMM) in Brazil, including an approximation to best practices in designing a safe harbor regime based on the TNMM. Read: Implementing the Transaction Net Margin Method for Transfer Pricing in Brazil
From the Archive
Bloomberg Tax contributors are keeping us apprised of the OECD’s aspirations for taxing the digital economy.
After U.S. Treasury Secretary Steven Mnuchin requested a “pause” in the negotiations over the taxation of digital services providers, John Harrington of Dentons identified theories of group decision-making to suggest some possible outcomes in the negotiations led by the OECD.
Will Morris of PwC observed where the project was and said the original objective of the project remained valid, but the route may need some adjustments.
Jeff VanderWolk of Squire Patton Boggs wrote that the eventual policy must be based on reality and not such myths as that digital multinationals are not currently paying their fair share in market countries or that higher taxes won’t be passed on to consumers.
What’s happening outside the world of tax?
The Small Business Administration’s management of the Economic Injury Disaster Loan (EIDL) Program under the CARES Act has had several issues. Katharine Meyer, a principal at GKG Law, examines the pros and cons of obtaining an EIDL, including the potential burdens of the collateral requirements and maintaining hazard insurance on that collateral. Read: Is an EIDL Right for Your Business?
There is nearly $200 trillion in U.S. dollar Libor contracts touching virtually every kind of corporate and consumer loan, but the key benchmark interest rate will likely cease to be published around the end of 2021. Meredith Coffey, executive vice president at the Loan Syndications & Trading Association, provides recommendations on how to prepare for transition to avert market disruption. Read: Saying Goodnight to Libor—500 Days and Counting
A law firm’s use of new technology can cut its legal costs and improve how it serves its clients. Shulman Rogers attorney Anthony Millin walks us through his firm’s decision to adopt a new tech platform to significantly change its approach to securing new clients and keeping them. Read: Delivering Innovative, Client-Centric Legal Services During Pandemic
Covid-19 presents employers the opportunity to showcase their leadership abilities and that they take gender equity seriously. Kaplan Hecker & Fink attorneys outline steps private companies can take to alleviate the disparate impact the pandemic is having on women. Read: #TimesUp During Covid-19—Private Sector’s Role in Mitigating Gender Equality Crisis
Exclusive Content for Bloomberg Tax Subscribers
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Kim Blanchard of Weil, Gotshal & Manges LLP discusses the dual inclusion exception to the disregarded payment rule found in Treasury Regulation Section 1.267A-2(b). It provides that the excess, if any, of a specified party’s disregarded payments for a taxable year over its dual inclusion income for the same taxable year is a disqualified hybrid amount. Where there is a disqualified hybrid amount, there is a disallowance of the U.S. deduction for a specified payment.
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 firstname.lastname@example.org.