The Latest in Tax News: April 2020 Edition

Textbook Tax presents its monthly tax news update. A quick read discussing various tax news, tax stories, and tax events trending in the world of tax during the month. The following tax topics cover the month of April 2020. The tax topics presented represent my favorites in tax news and tax-related events. Please comment any tax news stories you found interesting for the month of April. Additionally, please email me or connect with me on social media for the monthly tax news update sent straight to you!
Related Posts -- Prior Weeks' Tax News

COVID-19 News 

Tax News for April 2020

Tax Topic: Many countries easing the tax residency rules due to the virus

Tax Story Summary:

  • Several countries reassured multinationals that the travel bans will not change a company's tax system or create unexpected taxes.
    • The inability to travel could could affect where companies are based for tax purposes.
    • High-level executives are unable to perform necessary business functions in other countries.
  • The travel ban issues could make multinationals vulnerable to tax residency or permanent establishment rules, resulting potentially in double residency tax issues.
    • However, many countries eased the related tax residency rules.
    • For example, the following countries promised to forgive the inability to meet residency requirements: Australia, United Kingdom, and Ireland. 
  • The best defense against the issue is to document the activities performed and the reason for doing said activities at the specific location. 

Tax Topic: OECD continues on tax overhaul and the related digital tax reform

Tax Story Summary: 

  • The OECD aims to deliver a global tax overhaul by year end.
    • The head tax official of the OECD stated that the goal remains year end despite COVID-19. 
  • Many business groups ask and hope for a pause to the global tax overhaul.
    • The business groups cite the difficulty of virtual negotiation.
  •  The OECD must obtain agreements from nearly 140 countries.
    • Several countries have already enacted new unilateral measures to tax digital companies, including France, Italy, and India.
  • The OECD planned to reach a broad agreement at its meeting scheduled for July involving the negotiators from the countries involved in the tax overhaul.
    • The OECD has yet to confirm if the meeting will take place. 

Tax Topic: Transfer pricing in a pandemic

Tax Story Summary:

  • Adviser believe that governments and taxing authorities will place greater emphasis on transfer pricing.
    • The goal of the increased transfer pricing measures is to help alleviate the overall effect caused by the economic slowdown on a country's national budget 
    • The focus will be on multinationals and related transfer pricing agreements/transactions.
  • Another issue involves the allocation of the virus-related costs.
    • Should the U.S. parent absorb the loss or should the local subsidiaries adsorb the costs?
  • Multinationals need to engage governments and taxing authorities to mitigate the risks associated with virus costs and the economic slowdown.
    • It is important for the firms to set up an extensive virus-related tracking system.

That is all for the most recent tax news, tax stories, and tax events!

For any and all comments, please share below!


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