USCIB Tax Committee Work Featured in Bloomberg, Tax Notes International

USCIB and the USCIB Taxation Committee appeared prominently in the tax press this week—Tax Notes International and Bloomberg Tax—with coverage of a USCIB letter filed with the U.S. Treasury Department on April 25.  According to USCIB Vice President and International Tax Counsel Rick Minor, this was a unilateral consultation and not a letter related to a public consultation that USCIB’s Tax Committee is currently working on.

Bloomberg Tax quoted Minor and excerpts of USCIB’s letter in its article, Amount B Could Involve Routine Function List, Treasury Told. “Our members consider Amount B to be, as it has been described in the 2020 Pillar One blueprint, one of the key benefits of a Pillar One solution,” he said. “The concept is directly related to one of the fundamental goals of Pillar One, improved tax certainty.”

Click here for the Tax Notes International story. Below is the Bloomberg Tax coverage with quotes from Minor and excerpts from the USCIB letter to the Treasury Department.

Bloomberg Tax: Amount B Could Involve Routine Function List, Treasury Told

By Natalie Olivo · Apr 26, 2022, 8:01 PM EDT ·  Listen to article

An approach for determining Amount B — the routine portion of profits subject to allocation under a global corporate tax plan — could include an agreed list of functions related to these earnings, a U.S. business association told the U.S. Treasury Department.

The U.S. Council for International Business sent Treasury a letter Monday that listed marketing and distribution functions that relate to normal, or routine, returns that fall under Amount B of a tax agreement reached in October by an inclusive framework of nearly 140 jurisdictions. Amount B would simplify and streamline the application of the arm’s-length principle to in-country baseline marketing and distribution activities, according to the Paris-based Organization for Economic Cooperation and Development, which led negotiations on the tax rewrite.

Amount B falls under the overhaul’s first pillar alongside Amount A — a separate provision that involves a narrow departure from traditional arm’s-length transfer pricing rules, which divide intercompany profits based on how unrelated parties would behave. Under Amount A, large companies would reallocate a portion of their above-normal returns to market jurisdictions where they have customers but not a physical presence.

The USCIB told Treasury in its letter that Amount B must be anchored in the arm’s-length principle. The group included a list of entrepreneurial functions — which commonly generate residual returns that would fall under Amount A — and a list of routine marketing and distribution functions that would relate to normal returns under Amount B.

“These two categories cover a significant volume of the transfer pricing controversies of our members which we understand Pillar One is intended to largely eliminate,” the USCIB wrote.

The group’s list of entrepreneurial functions included final decision-making on large discounts and nonstandard contracts and setting global or regional branding, marketing, pricing and promotional strategies. As for routine marketing and distribution functions, the group’s list included bearing limited market and business risks, as the profits of routine distributors are fixed, in addition to not owning any high-value intangible property.

These lists were compiled by the USCIB’s members from company transfer pricing files, meaning they represent “functions that are audit tested and generally represent clear distinctions between entrepreneurial and routine functions,” according to the group’s letter.

Rick Minor, vice president and international tax counsel at the USCIB, told Law360 on Tuesday that his group wanted to be helpful in the absence of a formal consultation to offer timely guidance on Amount B to delegates of the inclusive framework.

“Our members consider Amount B to be, as it has been described in the 2020 Pillar One blueprint, one of the key benefits of a Pillar One solution,” he said. “The concept is directly related to one of the fundamental goals of Pillar One, improved tax certainty.”

So far, the OECD has only released draft rules aimed at helping countries implement Amount A in addition to the overhaul’s second pillar, which involves minimum tax rules. The organization has also released public feedback on its Amount A draft rules, including calls for guidance that would let multinational corporations seek advance certainty on how tax administrations would apply the new rules, including a proposed anti-abuse provision.

Meanwhile, KPMG issued a proposal for Amount A that was released Tuesday by Treasury’s Office of Tax Policy. According to the firm, the proposal involves identifying entities to fund Amount A and determining the share of Amount A that would be allocated to each payer entity.

This proposal would use a formulaic approach that approximates a “market-connection” test without the need to look at transfer pricing documentation or make factual judgment calls, according to KPMG.

Treasury didn’t immediately respond to a request for comment.

Taxation

Magnifying Your Voice with USCIB:

  • USCIB’s Tax Committee is the most respected U.S. business association on international tax issues. USCIB is the only U.S. business association formally affiliated with the world’s three largest business organizations where we work with business leaders across the globe to extend our reach to influence policymakers in international markets that are important to American business.

Trends and Challenges Facing U.S. Business:

  • Multiple sets of inconsistent rules that drive up costs and result in double taxation
  • The mounting political pressure to move towards changing the taxation of the digitalized economy
  • Efforts to unfairly increase the tax burden on companies

USCIB’s Response:

  • Build consensus with like-minded industry peers and participate in off-the-record briefings with policymakers both home and abroad
  • Engage with the OECD on the development of international taxation principles
  • Proactively shape the development of the OECD’s guidance on the taxation of the digitalized economy by demonstrating to policymakers that unilateral action can result in double taxation, decreased trade, and reduced global growth
  • Actively monitor and contribute to the work of the UN Committee of Tax Experts to ensure its alignment with the work of the OECD Tax Committee and inform policymakers of their actions’ impact on investment
  • Support enactment of foreign tax simplification provisions in the IRC that would significantly reduce the burden of complexity for U.S. companies and enhance their international competitiveness
  • Host an annual conference in Washington, DC that provides a unique opportunity for the U.S. business community to interact with key representatives from the OECD Centre for Tax Policy and Administration (“CTPA”).

More Recent Accomplishments

News Stories

USCIB Tax Committee Work Featured in Bloomberg, Tax Notes International (4/27/2022) - USCIB and the USCIB Taxation Committee appeared prominently in the tax press this week—Tax Notes International and Bloomberg Tax—with coverage…
USCIB Leads Business Policy Roundtable as Part of Brazil’s Accession to OECD  (11/17/2021) - The Brazil OECD Business Policy Roundtable brought together U.S. and Brazilian government officials, the OECD and industry representatives in early…

Read More

Chair

Timothy M. McDonald
Senior Vice President, Finance & Accounting, Global Taxes
The Procter & Gamble Company

Vice Chairs

Harris Horowitz
Global Head of Tax
BlackRock, Inc.

Jocelyn Krabbenschmidt
International Tax Director
Apple Inc.

Will Morris
Deputy Global Tax Policy Leader
PwC

Vice Chairs (continued)

Tom Roesser
Senior Director, Tax Affairs
Microsoft Corporation

Daniel Smith
Director, International Tax Planning & Policy
Google Inc.

John A. Stowell
Senior Vice President – Tax
The Walt Disney Company

Louise Weingrod
Vice President, Global Taxation
Johnson & Johnson

Chad J. Withers
Global Tax Director
Caterpillar Inc.

USCIB Leadership

Rick Minor
Vice President and International Tax Counsel
202-682-7376 or rminor@uscib.org

Subcommittees

Transfer Pricing Subcommittee

VAT Subcommittee

Working Groups

EU Tax Working Group

2022 OECD USCIB Tax Conference

 

 
 

until we see each other in person

at the Four Seasons in Washington, D.C.

June 27, 2022

8:30 a.m. – 6:00 p.m.
6:00 – 7:30 p.m. Cocktail Reception

June 28, 2022

8:00 a.m. – 1:00 p.m.

The event is sold out.

We’re back! Now in its 15th year, this annual conference provides a unique opportunity for the U.S. business community to interact with key representatives from the OECD Centre for Tax Policy and Administration (“CTPA”) as well as key members of the OECD’s Committee on Fiscal Affairs: including Pascal Saint–Amans, Director, CTPA, and Grace Perez–Navarro, Deputy Director, CTPA. Speakers will also include Fabrizia Lapecorella, the new Chair of the OECD’s Committee on Fiscal Affairs and Director General for International Taxation at the Italian Ministry of Finance. The focus of the conference will be on the Two Pillar Solution to the Tax Challenges of the Digitalization of the Economy but will also cover other key international tax issues.

What You Need To Know

DAY 1

8:00–9:00

Tax Committee “Open House”

Registrants are invited to join Rick Minor at their initiative for questions and suggestions regarding the USCIB,  BIAC and ICC tax committees.

8:30–9:30

Registration

9:30–10:00

Welcome and Opening Remarks

  • Fabrizia Lapecorella, Chair, OECD Committee on Fiscal Affairs; Director General   of Finance,  Ministry of Finance, Italy
  • Rick Minor, Vice President & International Tax Counsel, USCIB
  • Tim McDonald, Senior Vice President-Finance & Accounting, Global Taxes, The Procter & Gamble Company

10:00–11:00

Two Pillar Solution to Tax Challenges of Digitalization of the Economy

After years of discussions, in October 2021, more than 130 countries and jurisdictions of the OECD/G20 Inclusive Framework on BEPS agreed a landmark Statement and Detailed Implementation Plan on the two-pillar approach to addressing the tax challenges arising from the digitalization of the economy, which was subsequently endorsed by G20 Finance Ministers and Central Bank Governors at their October meeting. Pillar One is intended to ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs through an innovative formulaic approach. Pillar Two sets a floor on tax competition on corporate income tax through the introduction of a global minimum corporate tax that does not eliminate tax competition but does set multilaterally agreed limitations on it. This panel will provide the broad overview of the work and discuss next steps.

  • Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration
  • Itai Grinberg, Deputy Assistant Secretary for Multilateral Tax Office of Tax Policy, U.S. Treasury
  • Martin Kreienbaum, Director General, International Taxation, Federal Ministry of Finance, Germany
  • Tom Hutchinson, Vice President, Finance, Google
  • Alan McLean, Chair, BIAC Tax Committee and Executive Vice President, Taxation and Controller, Shell International Limited, United Kingdom
  • Lisa Wolski, Head of Government Affairs and Senior Executive Counsel, General Electric

11:00–11:20

Refreshment Break

11:20–12:30

Pillar One: Part I

Pillar One is intended to restore stability to the international tax system by bringing it into the 21st century. It re-allocates taxing rights over 25% of the residual profit of the largest and most profitable MNEs to market jurisdictions (Amount A). It does so through a formulaic approach applied to the MNE group’s profits.  This panel will discuss the overall design of Amount A and some of the key aspects of Amount A such as revenue sourcing, nexus and tax base.

  • Achim Pross, Head, International Cooperation and Tax Administration Division, OECD Centre for Tax Policy and Administration
  • Gaël Perraud, Co-Chair, OECD Task Force on the Digital Economy Director of International Taxation and European Affairs, Ministry of Economy and Finance, France
  • Itai Grinberg, Deputy Assistant Secretary for Multilateral Tax Office of Tax Policy, U.S. Treasury
  • Tracee Fultz, Global Transfer Pricing Leader, Ernst & Young LLP
  • Tim McDonald, Senior Vice President-Finance & Accounting, Global Taxes, The Procter & Gamble Company
  • Loren Ponds, Member and Co-Lead of the Tax Policy Practice, Miller & Chevalier

12:30–2:00

Luncheon and Keynote Address

Keynote Address delivered by Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration.

2:00–3:15

Pillar One: Part II

This panel will continue the discussion of Amount A focusing on the scope of the provision, including the exclusions for extractives, and regulated financial services. It will also consider the issues associated with the elimination of double taxation, the marketing and distribution safe harbor and withholding taxes. Tax certainty issues will be covered in Session IX.

  • Achim Pross, Head, International Cooperation and Tax Administration Division, OECD Centre for Tax Policy and Administration
  • Michael Plowgian, Co-Chair, OECD Task Force on the Digital Economy and Counsellor, Office of Tax Policy, US Treasury
  • Will Morris, Deputy Global Tax Policy Leader, PwC
  • Danielle Rolfes, Co-Partner in Charge, Washington National Tax-International Tax, KPMG
  • Daniel Smith, Director, International Tax Planning & Policy, Google
  • Mike Williams, Director Business and International Tax, HM Treasury, United Kingdom

3:15–3:35

Refreshment Break

3:35–5:00

Increased Global Mobility of Workers—What does it mean for tax policy?

Digitalization has led to significant changes in labor markets, with teleworking having expanded dramatically as a result of the pandemic and with new types of jobs that can be done anywhere increasing. Physical presence is a key determinant of corporate income tax nexus and taxing rights such as PE creation and company residence. Physical presence also plays an important role in transfer pricing (e.g., income allocation, profit attribution if PE is created). At the same time, tax incentives to attract so-called “digital nomads” are being introduced. The OECD issued some interim guidance at the onset of the pandemic but is it time to take a deeper look at these issues? This panel will discuss the tax treaty, transfer pricing and other implications of this trend for businesses, individuals and tax policy and tax administration.

  • Grace Perez-Navarro, Deputy Director, OECD Centre for Tax Policy and Administration
  • Liz Chien, Global Head of Tax and Chief Tax Counsel, Protocol Labs Inc.
  • John Harrington, Partner, Dentons US LLP
  • Liz Stevens, Member, Caplin & Drysdale
  • Bret Weaver, Partner, KPMG
  • Mike Williams, Director, Business and International Tax, HM Treasury, United Kingdom

5:00–6:00

Tax and Climate Change

Countries have committed to ambitious emissions reduction targets and a growing number have committed to net-zero greenhouse gas emissions by 2050 while others are already moving in that direction. However, and in spite of significant progress made to date, near-term policy actions on climate remain insufficient to meet the Paris Agreement objectives, and the diversity of policy approaches risks limiting their combined impact as well as elevating the likelihood of negative spillovers. To ensure the effectiveness of combined efforts and to avoid adverse interactions with trade and development agendas, the OECD has proposed establishing an inclusive forum for greater multilateral dialogue, informed, and facilitated by technical and objective analysis of carbon pricing and other climate mitigation measures, building on the OECD’s comparative data in Taxing Energy Use.  This panel will discuss the latest developments in this area.

  • Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration
  • Fabrizia Lapecorella, Chair, OECD Committee on Fiscal Affairs, and Director General of Finance, Ministry of Finance, Italy
  • Hannah Hawkins, Principal, KPMG Washington National Tax, KPMG
  • Alan McLean, Chair, BIAC Tax Committee and Executive Vice President, Taxation and Controller, Shell International Limited, United Kingdom

6:00–7:30

Reception

DAY 2

7:30–8:00

Tax Committee “Open House”

Registrants are invited to join Rick Minor at their initiative for questions and suggestions regarding the USCIB,  BIAC and ICC tax committees.

8:00–8:30

Continental Breakfast

8:30–10:40

Pillar Two: Global Minimum Tax

This session will focus on the second pillar, which sets out the Global Anti-Base Erosion rules (GloBE) and the Subject to Tax Rule (STTR.) The GloBE rules, which were published in December 2021 and complemented by Commentary released in March 2022, aim to address the continued risk of profit shifting to entities subject to no or very low taxation through the development of two inter-related rules: an income inclusion rule and an under-taxed payment rule. The panel will discuss the main elements of the GloBE rules, STTR as well as the plan for implementation.

  • John Peterson, Head of Unit, Aggressive Tax Planning, OECDCentre for Tax Policy and Administration
  • Rebecca Kysar, Counselor to the Assistant Secretary for Tax Policy, US Treasury
  • Isaac Wood, Attorney-Advisor, Office of Tax Policy, US Treasury
  • Martin Kreienbaum, Director General, International Taxation, Federal Ministry of Finance, Germany
  • Barbara Angus, Global Tax Policy Leader, Ernst & Young LLP
  • Ryan Bowen, Senior Manager | Washington National Tax Office, Deloitte
  • Harris Horowitz, Managing Director, Global Head of Tax Policy & Innovation, BlackRock, Inc.
  • Louise Weingrod, Vice President, Global Taxation, Johnson & Johnson

10:40–11:00

Refreshment Break

11:00–12:00

Tax Certainty: Dispute Prevention/Dispute Resolution | Session 1

Under the Pillars: Dispute Prevention and Resolution

Enhancing tax certainty is a key element of the Two Pillar Solution to the tax challenges arising from digitalization. The October Statement calls for MNES that are in-scope of Pillar One to benefit from dispute prevention and resolution mechanisms to avoid double taxation for Amount A, including all issues related to Amount A. Given the formulaic approach to allocating profits under Amount A, this will call for innovative, multilateral approaches to dispute prevention and resolution. Amount B, which calls for simplification and streamlining of the application of the arm’s length principle as it applies to in-country baseline marketing and distribution activities is also intended to enhance tax certainty by reducing disputes on some of the most common transfer pricing cases. The Inclusive Framework is also considering tax certainty in the context of Pillar Two, as Implementation framework consistency, coordination, simplicity, and safe harbors. This panel will discuss the challenges and opportunities in designing rules to prevent disputes and ensure timely resolution of disputes under each of the Pillars.

  • Achim Pross, Head, International Cooperation and Tax Administration Division, OECD Centre for Tax Policy and Administration
  • Michael Plowgian, Co-Chair, OECD Task Force on the Digital Economy and Counsellor, Office of Tax Policy, US Treasury
  • Gaël Perraud, Co-Chair, OECD Task Force on the Digital Economy Director of International Taxation and European Affairs, Ministry of Economy and Finance, France
  • Mary Bennett, Senior Counsel, Baker & McKenzie
  • Tom Roesser, GM, Tax Policy Counsel, Microsoft

12:00–1:00

Tax Certainty: Dispute Prevention/Dispute Resolution | Session 2

Beyond the Pillars: Dispute Prevention and Resolution

The OECD Forum on Tax Administration continues to explore ways to increase tax certainty for taxpayers and tax administrations by making certainty available earlier, by making certainty processes more efficient, and by providing opportunities for certainty to be provided on a coordinated or multilateral basis. This panel will discuss the latest developments in the ICAP program, as well as work on streamlining the APA process, the possibility of multilateral APAs and MAP, and the wider use of standardized benchmarking.

  • Grace Perez-Navarro, Deputy Director, OECD Centre for Tax Policy and Administration
  • John Hughes, Director of Field Operations, Northeastern Compliance Practice Area (Mid-Atlantic) (LB&I), IRS
  • Nate Carden, Partner, Skadden
  • Mark Martin, Principal, Washington National Tax, KPMG
  • Tim McDonald, Senior Vice President-Finance & Accounting, Global Taxes, The Procter & Gamble Company
  • Sonja Schiller, Head of Global Tax Controversy, Netflix

1:00–1:05

Closing Remarks

  • Rick Minor, Vice President & International Tax Counsel, USCIB
  • Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration
  • Grace Perez-Navarro – Deputy Director, Centre for Tax Policy and Administration, OECD
  • John Peterson – Head of Unit, Aggressive Tax Planning, OECD Centre for Tax Policy and Administration
  • Achim Pross – Head of International Cooperation and Tax Administration Division, Centre for Tax Policy and Administration, OECD
  • Pascal Saint-Amans – Director, Centre for Tax Policy and Administration, OECD
  • Rick Minor – Vice President & International Tax Counsel, USCIB
  • Itai Grinberg – Deputy Assistant Secretary (International Tax Affairs), U.S. Treasury
  • John Hughes – Director of Field Operations, Northeastern Compliance Practice Area (Mid-Atlantic) (LB&I), IRS
  • Rebecca Kysar – Counselor to the Assistant Secretary for Tax Policy, U.S. Treasury
  • Michael Plowgian – Co-Chair, OECD Task Force on the Digital Economy and Counsellor, Office of Tax Policy, US Treasury
  • Isaac Wood – Attorney-Advisor, Office of Tax Policy, US Treasury
  • Martin Kreienbaum – Director General, International Taxation, Federal Ministry of Finance, Germany
  • Fabrizia Lapecorella – Director General of Finance of the Italian Ministry of Economy and Finance and Chair of OECD Committee on Fiscal Affairs
  • Gaël Perraud – Co–Chair, OECD Task Force on the Digital Economy; Director of International Taxation and European Affairs, Ministry of Economy and Finance, France
  • Mike Williams – Director, Business and International Tax, HM Treasury, United Kingdom
  • Barbara Angus – Global Tax Policy Leader, Ernst & Young LLP
  • Mary Bennett – Senior Counsel, Baker & McKenzie
  • Ryan Bowen – Senior Manager, Washington National Tax Office, Deloitte
  • Nate Carden – Partner, Skadden
  • Liz Chien – Global Head of Tax and Chief Tax Counsel, Protocol Labs Inc.
  • Tracee Fultz – Global Transfer Pricing Leader, Ernst & Young LLP
  • John Harrington – Partner, Dentons US LLP
  • Hannah Hawkins – Principal, KPMG Washington National Tax, KPMG
  • Harris Horowitz – Managing Director, Global Head of Tax Policy & Innovation, BlackRock, Inc.
  • Tom Hutchinson – Vice President, Finance, Google
  • Mark Martin – Principal, Washington National Tax, KPMG
  • Tim McDonald – Chairperson, USCIB Tax Committee and Senior Vice President, Finance & Accounting, Global Taxes, The Procter & Gamble Company
  • Alan McLean – Chairperson, Business at OECD Committee on Taxation and Fiscal Affairs and Executive Vice President, Tax and Controller, Shell International Limited
  • Will Morris – Deputy Global Tax Policy Leader, PwC
  • Loren Ponds – Member and Co-Lead of the Tax Policy Practice, Miller & Chevalier
  • Tom Roesser – GM, Tax Policy Counsel, Microsoft
  • Danielle Rolfes – Co-Partner in Charge, Washington National Tax-International Tax, KPMG
  • Sonja Schiller – Head of Global Tax Controversy, Netflix
  • Daniel Smith – Director, International Tax Planning & Policy, Google
  • Liz Stevens – Member, Caplin & Drysdale
  • Bret Weaver – Partner, KPMG
  • Louise Weingrod – Vice Chairperson, USCIB Tax Committee and Vice President, Global Taxation, Johnson & Johnson
  • Lisa Wolski – Head of Government Affairs and Senior Executive Counsel, General Electric

The registration rate is $1,495 for USCIB members and $1,795 for non–members.

Registrations are non-refundable. Cancellations are liable for the full conference fee. You may send a substitute in your place for no additional charge. Substitutions must be requested, in writing, no later than Friday, June 10.

Conference Materials

  • USB Flash Drives with Background Documents will be included in materials handed out to attendees. Electronic copies are available to registered participants upon request.

PowerPoint Presentations

  • Hard Copies of PowerPoint Presentations will not be distributed. Electronic copies will be sent via email to participants when they are finalized.

Conference Logistics

Location Details: The conference will be held at the Four Seasons Hotel located at 2800 Pennsylvania Avenue NW. The meeting portion of the conference will take place in the Corcoran Ballroom located on the Banquet level. The Luncheon on Monday, June 27 will take place in the Dumbarton Conservatory next door to the Corcoran Ballroom.  The Reception, also on Monday, June 27, will take place in the Seasons Restaurant on the Lower Lobby Level.

Wireless Internet:  Wireless internet is available for conference attendees in the meeting room.  Please ask a member of the conference staff for the wireless password. Complimentary internet is also available to conference participants in your hotel room.

Parking:  Discounted Valet Parking is available at the conference venue, The Four Seasons Hotel, for conference attendees. Please pick up a parking validation sticker at the registration table for each day of the conference.

Metro: The nearest metro station is the Foggy Bottom-GWU station.  Both Blue and Orange lines stop at the Foggy Bottom Metro.  The Hotel is approximately a four-block walk from the metro. (Map below)

3415_image002

A limited number of rooms have been blocked at the reduced rate of $435/night plus 14.95% tax at the conference venue, The Four Seasons Hotel, Washington, D.C.

Unbooked rooms (if any) will be released for general sale on June 6, 2022, and the group rate will not be available after this date.

Please contact the hotel Reservations Team at 202-342-0444 or by e-mailing res.washingtondc@fourseasons.com and mention the United States Council for International Business (USCIB) room block using the following code: 062722OECD.

Rooms reserved without a processed registration will be cancelled in order to ensure space for confirmed participants.

USCIB’s Tax Committee is the most respected U.S. business association on international tax issues. USCIB is the only U.S. business association formally affiliated with the world’s three largest business organizations where we work with business leaders across the globe to extend our reach to influence policymakers in international markets that… click here to learn more.

For sponsorship opportunities, please contact Alison Hoiem (ahoiem@uscib.org). 

For sponsorship opportunities, please contact Alison Hoiem (ahoiem@uscib.org). 

For registration support, please contact Diana Mendez (dmendez@uscib.org). 

For anything else, please contact Katya Nicholas (knicholas@uscib.org). 

2022 Sponsors:

 

Caplin & Drysdale

Black Deloitte Logo

Presented by:

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OECD

In association with:

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ITPF

 

USCIB Leads Business Policy Roundtable as Part of Brazil’s Accession to OECD 

The Brazil OECD Business Policy Roundtable brought together U.S. and Brazilian government officials, the OECD and industry representatives in early November to discuss taxation reform and best practices as Brazil seeks to accede to the OECD.  According to USCIB Director for Investment, Trade and China Alice Slayton Clark, this is the latest of the several forums held by the Brazil Roundtable to explore changes to policy and practice – in line with OECD standards and best practices – that benefit businesses and employees while driving inclusive economic growth in Brazil.

Isaias Coelho, special advisor to Brazil’s Ministry of Economy, and Sandro de Vargas Serpa, undersecretary of Taxation and Litigation at the Federal Revenue of Brazil (RFB), detailed the regulations and legislative proposals under consideration that would simplify taxes at the state, federal and municipal levels, reforming consumption, income and international taxation practices.

“Brazil is currently undertaking significant regulatory reforms consistent with OECD guidelines including Recommendations of the Council on Regulatory Policy and Governance,” said Coelho. The ultimate hope, according to Mario Sergio Carraro Telles, executive manager of Economics for the Brazil Industry Association, is to adopt laws that simplify the tax system and reduce costs and uncertainty for companies.

Brazil has been working since 2018 in a dialogue with OECD on transfer pricing, which has evolved into a project aimed at aligning the existing transfer pricing regime with the OECD standard.  This joint project was made possible with the support of UK Prosperity Fund and other OECD countries who share their experience and best practices with Brazil. The United States has bolstered this process through technical assistance and training, asserted John Hughes, director of Advanced Pricing and Mutual Agreement Program of the U.S. Internal Revenue Service.

According to OECD Senior Advisor Tomas Balco, current policies in Brazil end up double taxing multinationals, deterring foreign investment and preventing Brazil from participating fully in global value chains. Luiz de Medeiros, Brazil country manager for IBM and a USCIB member, provided details from an industry perspective, expressing “great hope” that Brazil laws can be aligned with OECD norms.  Toward that end, Flávio Antônio Gonçalves Martins Araújo, head of the International Relations Office at RFB, reported that Brazil Administration currently is working on a legislative proposal to submit to Congress and start a political discussion in 2022 on a new transfer pricing law.

“It is clear from the speakers that the mood is right for reform in Brazil, and efforts are being made despite the economic challenges posed by the pandemic,” said Clark. “We hope these roundtables can inform and inspire in that regard, offering solutions for change that ease the economic burden for all.”

USCIB led the meeting, along with cohorts from the Brazil-U.S. Business Council of the U.S. Chamber of Commerce and Brazil’s National Industry Confederation (CNI). As the official U.S. representative to Business at OECD (BIAC), USCIB has been actively monitoring Brazil’s accession request to the OECD in order to advance business interest.

Additional roundtable discussions will be held throughout 2022, covering investment and trade, environment and sustainable development, as well as innovation and intellectual property.  Digital and regulatory issues were discussed earlier this year.

USCIB Acknowledges the G20 Finance Ministers Endorsement of the October Two-Pillar Global Tax Proposals

Washington D.C., October 13, 2021—The United States Council for International Business (USCIB) notes the endorsement by the G-20 Finance Ministers today of the OECD/G20 Inclusive Framework landmark deal announced on October 8. The deal, agreed by 136 countries, including the US, establishes a new framework for international tax reform represented by two distinct proposals or pillars. The two-pillar solution will be delivered to the G20 Leaders’ Summit in Rome at the end of the month while the intensive work on the design and drafting of the numerous parts of the deal continues into 2022.

“The OECD has once again reached a significant milestone on schedule and was able to add a handful of key countries into the fold of the deal agreement since July,” said USCIB Vice President and International Tax Counsel Rick Minor.

The October deal terms include a long list of technical work that must still be completed in relatively short order according to the OECD timeline. USCIB Tax Committee company members are positioned to directly advise the OECD drafting teams through its membership in the Business at OECD Taxation Committee. According to Minor, “putting aside the ambitious timelines through 2022, our members will be focused on the development of the design and details for key aspects of each of the pillars. With respect to Pillar One, this includes, but is not limited to, dispute prevention and resolution mechanisms, the tax liability rules, revenue sourcing, the marketing and distribution safe harbor and so-called Amount B. We are also mindful of the fact that the drafting of the Pillar Two rules is on a parallel path with the numerous GILTI deliberations in Congress this fall which arguably puts pressure on that process if there is no coordination in review.” USCIB will remain engaged in the OECD rule design process through Business at OECD and directly, through the appropriate engagement.

About USCIB

USCIB promotes open markets, competitiveness and innovation, sustainable development, and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. As the U.S. affiliate of the International Chamber of Commerce (ICC), the International Organization of Employers (IOE) and Business at OECD (BIAC), USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade and investment. More at www.uscib.org.

Contact:

Rick Minor

VP and International Tax Counsel

rminor@uscib.org

USCIB Meets With New OECD Secretary General Cormann on His First Official DC Visit

L-R: Kennedy, Robinson, SG Cormann, Johnston meet in the OECD Washington DC office in July 2021

USCIB members joined a first meeting and dialogue with OECD Secretary General Mathias Cormann, hosted by the U.S. Chamber of Commerce on July 21 in Washington DC. USCIB President and CEO Peter Robinson, and Citi Managing Director and Business at OECD (BIAC) Chair Charles R. Johnston, led the discussion, along with USCIB Board Member and Executive Vice President for International Affairs at the Chamber Myron Brilliant.

As the U.S. affiliate of and representative to BIAC, the official business spokes-organization to the OECD, USCIB values and engages with OECD on a wide range of cross-cutting issues. In light of the U.S. chairmanship of this year’s OECD Ministerial Council Meeting on October 5–6 in Paris, the meeting offered USCIB Committee Chairs and other active member representatives the opportunity to highlight their priorities for OECD’s policy recommendations.

SG Cormann described his leadership priorities for OECD, which center around restoring economic growth and recovery, including through multilateral trade. He highlighted the thought leadership role of the OECD in G7 and G20 discussions of a global corporate minimum tax rate. He also discussed the potential for OECD to contribute to a possible similar global conversation on carbon pricing and carbon border adjustment. Other topics covered included responsible business conduct; tackling illicit trade; and innovation and digital economy.

In his closing remarks, Robinson stated, “Imagine what could be accomplished if all multilateral institutions followed the OECD’s consultative model to work with business and co-create solutions to urgent challenges!”

Robinson thanked Cormann, and said that USCIB and the American business community are dedicated to working with OECD through BIAC to show the way through and past the pandemic on fundamentals like regulatory coherence and combatting corruption, as well as on emerging technologies and issues.

In the News: USCIB Quoted in Tax Notes Following OECD Global Tax Update

USCIB Vice President for Taxation Policy Rick Minor was quoted in a lead article in Tax Notes on July 6 regarding the significant global tax update statement made on July 5 by the Organization for Economic Cooperation and Development (OECD).

The OECD inclusive framework on base erosion and profit shifting confirmed that 130 of its 139 members have agreed on key elements of the plan, which aims to address the tax challenges of an increasingly digital and globalized economy.

According to the OECD, the 130 countries and jurisdictions represent more than ninety-percent of global GDP.

In the Tax Notes article, Minor said the USCIB’s members will follow the inclusive framework’s progress closely. “I understand the next significant document will be the design and implementation plan mentioned in the statement,” he said. “We should expect consultation with the business community will continue more earnestly now.”

USCIB Tax Committee members Will Morris (PwC) and Robert Stack (Deloitte) were also quoted.

Addressing Tax Challenges Arising from Digitalization of the Economy: USCIB Submits Comments to OECD

Washington D.C., December 14, 2020 – The U.S. Council for International Business (USCIB), which represents many of America’s leading global companies, provided comments to the Organization for Economic Cooperation and Development (OECD) in response to the OECD’s Public Consultation Request to its Reports on the Pillar One and Pillar Two Blueprints, which would develop coherent rules to address the tax challenges arising from the digitalization of the economy.

Among its recommendations, USCIB emphasized that the OECD rules should be developed with consideration of their potential impact on global growth and business investment decisions, and should be designed in a way to support the achievement of tax certainty for taxpayers and tax administrations and not be too complex or too onerous in compliance to discourage global investment. According to its comments, USCIB noted that the rules should also be based, to the maximum extent possible, on internationally accepted principles of taxation for coherency in their creation and consistency in their application.

For USCIB’s complete comments to the OECD, please click here.

About USCIB:
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world, generating $5 trillion in annual revenues and employing over 11 million people worldwide. As the U.S. affiliate of the International Chamber of Commerce (ICC), the International Organization of Employers, and Business at OECD (known as BIAC), USCIB helps to provide business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

Carol Doran Klein Retires, USCIB Welcomes Rick Minor as New Tax Lead

Carol Doran Klein
Carol Doran Klein

USCIB is pleased to announce that Richard Minor (who goes by Rick) has joined as its next International Tax Counsel upon Carol Doran Klein’s retirement.

“Carol has contributed immeasurably to the strengthening of the USCIB tax practice and we are grateful for her professional contributions and personal friendship over the last ten years,” said Peter Robinson, USCIB’s president and CEO. He added, “While we are saddened to see Carol go, Rick is a worthy successor and an excellent addition to the USCIB team. He brings a wealth of technical knowledge on international tax matters, experience in OECD tax policy and process, and a robust foreign government and European Commission network. I’m confident his expertise and international perspective will serve USCIB members well.”

Rick Minor
Rick Minor

Minor has deep experience in both the private and public sectors, having held senior tax roles with three large companies in Europe, in addition to serving as a Digital Policy Advisor to the Government of Luxembourg on a broad range of cross-border business issues with particular regard to EU data privacy, VAT and digital tax policy. His corporate background included positions as Vice President, Group Tax Counsel and Government Affairs for AOL Europe; Head of Tax, EMEA for ArcelorMittal; and Director of Tax, EMEA for Honeywell Europe. Minor also served as Director of International Cooperation and Business Investment for the North Carolina Department of Commerce, working to attract U.S. and foreign corporate investment to North Carolina. Minor got his bachelors at Duke University, his law degree at UNC-Chapel Hill and his LL.M. in tax at Georgetown. He began his career as an attorney specializing in international tax planning with global law firms in DC, Munich and London. Doran Klein and Minor served together on the OECD Technical Advisory Group (TAG) for VAT.

Minor assumes management of the USCIB Committee on Taxation, which promotes sound, appropriate and consistent international tax policy in the U.S. and overseas, including minimizing double taxation. The committee is chaired by Bill Sample, tax policy advisor at Microsoft Corporation, and encompasses leading tax professionals from USCIB member companies and organizations. The committee is especially active on OECD matters, in view of USCIB’s role as the American affiliate of Business at OECD (BIAC), and organizes a yearly conference bringing together USCIB members with top tax officials from the OECD and member governments.

USCIB Joins Coalition to Oppose IRS Proposal to Declare Revenue Procedure Obsolete

USCIB joined a coalition of over a dozen other trade associations to submit a letter to the IRS Large Business and International Division, opposing the proposal to declare Revenue Procedure 94-69 (“Rev. Proc. 94-69”) obsolete. According to the letter, under §6662, the general rule is a taxpayer has until the time the taxpayer is first contacted by the IRS and notified that a tax return is under examination to submit an amended tax return or make other adequate disclosures of errors on their originally filed tax return.

The letter states, “Rev. Proc. 94-69 allows taxpayers who are under continuous audit to avoid the imposition of certain penalties by submitting a written statement within 15-days after receipt of an information request from the IRS, describing all items that would result in adjustments if the taxpayer were to file a properly completed amended return. Pursuant to Rev. Proc. 94-69, such written statements are treated as qualified amended returns.”

The letter goes on to give additional reasons Rev. Proc. 94-69 should not be declared obsolete:

  • Without Rev. Proc. 94-69, large taxpayers would be put in the position of either filing an amended return every time they discovered an error on a previously filed return or bearing the risk that penalties may be imposed.
  • Declaring Rev. Proc. 94-69 obsolete ignores the administrative burden it would visit on taxpayers who otherwise are generally required to file amended state income tax returns every time they filed an amended federal return.

Additionally, now is not an appropriate time to abandon the revenue procedure that has been in place and has been working well for over 35 years. The Tax Cuts and Jobs Act (“Act”) caused a sea change in many elements of the Internal Revenue Code and the IRS and Treasury continue to release guidance on these changes almost three years later. Taxpayers continue to digest the myriad changes to the tax laws and, because of the lag between the passage of the Act and the release of published guidance, taxpayers may not have filed their original returns in line with current guidance. For this reason alone, Rev. Proc. 94-69 is not yet obsolete.

The letter closes by urging the IRS to both retain and expand the eligibility for use of Rev. Proc. 94-69.

The letter can be found in full here.