Curated by Daniel Xu
It’s rare that one portion of a government believes a tax is owed while the collecting authority agrees with the taxpayer that it isn’t. An upcoming European Court of Justice decision will settle one such case, which involves the European Commission arguing that Apple Inc. owes Ireland 13 billion euros and Apple and Ireland agreeing that no tax is owed.
The ECJ’s advocate general has issued an advisory opinion that alleges the lower court erred in throwing out a European Commission decision calling for Apple to pay up. This doesn’t bode well for Apple—or Ireland.
Ireland’s days as a locus for offshoring corporate profits might be numbered if the bill is due, and doubly so if Apple was given a sweetheart deal. Accordingly, Ireland has been fighting the notion that Apple owes any tax for more than seven years.
The European Commission contends that Apple has received preferential tax treatment not afforded to other companies. If such a collusion were proven, there’s an open question as to whether the tax that Ireland should have collected is only Ireland’s to collect and keep, or whether other tax jurisdictions that saw profits lured away by the illegal deal can lay claim.
Investment in Ireland by multinational companies has been on a long-term upward trajectory. That trend could reverse if the decision by the ECJ costs Apple out of pocket and shows Ireland gave the electronics manufacturer a preferential deal compared with similarly situated multinationals.
At Bloomberg Tax, we’ll be keeping an eye on this case and any ensuing fallout. Our experts will provide in-depth analysis and insights on the global implications of this decision and help make sense of the increasingly global nature of tax policy.
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State Insights
Legislation that would make New York the first state to create a public database of the owners behind limited liability companies doesn’t carry the type of penalties for violations that are in a similar federal law, says tax controversy attorney Brian Ketcham.
Although Massachusetts’ new tax package could have made more significant improvements, its changes should encourage investment in the commonwealth, says Sherin and Lodgen’s Matthew Morris.
The income tax dispute between PepsiCo Inc. and the Illinois Department of Revenue illustrates how 80/20 exclusion rules allow companies to shift their profits and reduce state tax revenue, says Bruce Fort of the Multistate Tax Commission.
Federal Insights
Plante Moran’s David Landwehr, Ron Cook, and Mike Merkel examine the most difficult challenges of pass-through entity tax elections, which are exacerbated by rule differences among states.
Tax departments often don’t understand why tax can be an important ESG metric, while sustainability teams seem anxious to avoid discussing tax at all costs—but both need to adapt quickly, says PwC’s Will Morris.
Falcon Rappaport & Berkman’s Matthew Rappaport, Andrew Gradman, and Sam Brady identify a tax trap that can affect taxpayers who need a qualified appraisal to claim a deduction under Section 170 of the tax code.
Congress can and should consider amending the US tax code to provide greater benefits for military personnel who die in service to the nation, as well as to their spouses, says enrolled agent Morris Armstrong.
Global Insights
The shipping industry will sail into the uncharted waters of the EU Emissions Trading System next year. Kasia Klaczynska Lewis of EY considers what the carbon pricing mechanism might look like and the impact for shipping companies.
A new law on taxing mining royalties in Chile fails to offer the clear guidance that businesses use to determine whether they should invest in Chilean mining projects, say Diego Garcia and Juan Francisco Gutiérrez of CMS Carey & Allende.
Columnist Corner
Former New York Yankees owner George Steinbrenner died in 2010 when the US had no federal estate tax, resulting in an additional $495 million inheritance for his sons. In this week’s Technically Speaking, Andrew Leahey writes that this windfall example demonstrates a need to restructure the estate tax framework to lower exemption thresholds and raise rates.
Career Moves
Bryn Reynolds has joined Pinsent Masons as a partner in the London office.
Christina Jonathan has joined Jaspan Schlesinger Narendran as a partner in the trusts and estates department.
Giles Salmond has joined Stewarts as a partner on the tax litigation and resolution team in London.
Keith K. Grissom has joined Armstrong Teasdale as a partner in the St. Louis office.
Tara Rao Bild has joined Hill Ward Henderson as senior counsel in the trusts and estates group.
Joseph P. Jaconetta has joined McElroy, Deutsch, Mulvaney & Carpenter as a partner in its Hartford, Conn. office.
Euan Fleming has joined BTO Solicitors as a partner on the wills, estates, and succession planning team in Edinburgh.
Joseph T. Kaempf and Daniel A. Sito have been promoted to partner at Perkins Coie effective Jan. 1, 2024.
If you’re changing jobs or being promoted, let us know. You can email your submission to TaxMoves@bloombergindustry.com for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team.
*Note: Your Bloomberg Tax login is required to access Tax News.
- The ranks of companies such as Amgen Inc., Pfizer Inc., and heavy hitter trade groups lobbying on the OECD-brokered global tax deal more than doubled between 2019 and 2023, a sign of growing business interest in the pact’s potential impact on their bottom lines.
- Texas voters made clear the state won’t levy a tax on high-net-worth residents, approving a ballot measure denying the state Legislature the option of imposing a wealth tax.
- Coca-Cola Co. said that it disagrees with a US Tax Court ruling rejecting its challenge to an $882 million transfer pricing adjustment in Brazil.
- A Bloomberg Tax review shines a light on a decade-long effort to persuade wealthy Americans, with no connections to Malta, to plow their riches into Maltese retirement arrangements designed to make taxes on dividends, interest, and capital gains disappear.
Tax Journals
Tax Management International Journal
Multinationals with presence in Brazil should analyze their Brazilian entities’ tax profiles in light of a bill that seeks to terminate the long-standing notional interest deduction effective Jan. 1, 2024, say Maria Bel, Luis Vargas, and Paulo Vellano of PwC US Tax.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Our Wish List
Winter holidays are on the horizon, which means we’re entering peak shopping season. For November, we’d welcome thoughtful tax-related pieces focused on retail-related topics, such as the challenges of online or in-person sales in the post-Wayfair era. We’re also looking for pieces on sales tax audit and reporting challenges, as well as tax planning tips for companies with retail operations.
If you have an interesting, never-published article for publication, you can contact our Insights team by email at TaxInsights@bloombergindustry.com.
Our Team
We talk about tax a lot. But there’s much more that you might hear us talking about if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Watching
Rebecca Baker (Editor-at-Large): “Big Mouth.” The new season, with the awkward teens and their imaginary monsters saying goodbye to middle school and preparing for high school, is the best of the entire series.
Reading
Andrew Leahey (Columnist): “Separate Paths: Lenapes and Colonists in West New Jersey,” by Jean R. Soderlund. It’s a fascinating topic, and the author’s approach makes the book eminently readable.
Listening
Melanie Cohen (Content Editor): Bob Vylan, a UK rock/hip-hop duo whose music focuses on political and socioeconomic issues.
Stay Connected
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