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Full-Text Articles in Law
A Tale Of Two Subject-To-Tax Rules, Sol Picciotto, Jeffery M. Kadet, Bob Michel
A Tale Of Two Subject-To-Tax Rules, Sol Picciotto, Jeffery M. Kadet, Bob Michel
Articles
In this article, we analyze and compare two proposals for a new subject-to-tax rule (STTR) provision to be included in tax treaties, one from the U.N. Tax Committee and the other from the G20/OECD inclusive framework on base erosion and profit shifting. The U.N. proposal is broad, and would clarify that restrictions in tax treaties on taxation of income at the source where it is derived are conditional on that income being taxed at an agreed-upon minimum rate in the country where it is received. The inclusive framework version is much more limited, being confined to payments between connected entities …
Tax Treaties, The Constitution, And The Noncompulsory Payment Rule, Reuven S. Avi-Yonah
Tax Treaties, The Constitution, And The Noncompulsory Payment Rule, Reuven S. Avi-Yonah
Articles
US Tax treaties have been regarded as self-executing since the first treaty (with France) was ratified in 1932. Rebecca Kysar has argued this raises a doubt on whether the treaties are constitutional, because tax treaties (like other treaties) are negotiated by the executive branch and ratified by the Senate with no involvement by the House, and all tax-raising measures must originate in the House under the Origination Clause (U.S. Const. Art I, section 7, clause 7). Her preferred solution is to make tax treaties non-self executing, but that would reverse the universal practice since 1932, and is therefore unlikely. Moreover, …
If Not Now, When? U.S. Tax Treaties With Latin America After Tcja, Reuven S. Avi-Yonah
If Not Now, When? U.S. Tax Treaties With Latin America After Tcja, Reuven S. Avi-Yonah
Articles
Since the 1990s, the US tax treaty network has expanded to include most large developing countries. However, there remains a glaring exception: The US only has two tax treaties in Latin America (Mexico and Venezuela), and one pending tax treaty (Chile). The traditional explanation for why the US has no treaty with, for example, Argentina or Brazil is the US refusal since 1957 to grant tax sparing credits to developing countries. Before the Tax Cuts and Jobs Act of 2017 (TCJA), this explanation was wrong, because the combination of deferral and cross-crediting meant that tax holidays in a source country …
Xilinx Revisited, Reuven S. Avi-Yonah
Xilinx Revisited, Reuven S. Avi-Yonah
Articles
On March 22 the Ninth Circuit released its new opinion in Xilinx v. Commissioner, Doc 2010-6163, 2010 WTD 55-42. 1 As has been expected since the panel withdrew its original opinion, it reversed itself and in a 2-1 opinion held for the taxpayer. The opinion makes it pretty clear why the reversal occurred. It was the result of concentrated pressure by the international tax community and the fact that the government was unwilling to defend the theory on which the panel originally decided the case: that the arm’s-length standard of the section 482 regulations does not apply to cost sharing. …
Xilinx And The Arm's-Length Standard, Reuven S. Avi-Yonah
Xilinx And The Arm's-Length Standard, Reuven S. Avi-Yonah
Articles
On May 7 the Ninth Circuit decided Xilinx v. Commissioner. By a 2-1 majority, the panel reversed the Tax Court and held that costs of employee stock options must be included in the pool of costs subject to a tax-sharing agreement. The Xilinx decision is important for three reasons. First, cost sharing is probably the key element in current transfer pricing law because it is the principal way in which profits from intangibles get shifted from the United States to low-tax jurisdictions. Moreover, informed observers agree that the allocation of income from intangibles is the most important problem in transfer …
Tax Competition, Tax Arbitrage And The International Tax Regime, Reuven S. Avi-Yonah
Tax Competition, Tax Arbitrage And The International Tax Regime, Reuven S. Avi-Yonah
Articles
In the past ten years, I have argued repeatedly that a coherent international tax regime exists, embodied both in the tax treaty network and in domestic laws, and that it forms a significant part of international law (both treaty-based and customary). The practical implication is that countries are not free to adopt any international tax rules they please, but rather operate in the context of the regime, which changes in the same ways international law changes over time. Thus, unilateral action is possible, but is also restricted, and countries are generally reluctant to take unilateral actions that violate the basic …
U.S. International Treatment Of Financial Derivatives, Reuven Avi-Yonah, Linda Swartz
U.S. International Treatment Of Financial Derivatives, Reuven Avi-Yonah, Linda Swartz
Articles
The current proposals to substitute consumption for income as the principal U.S. tax base have already been the topic of considerable commentary in these pages. However, one issue has received relatively little attention in the discussion of the various reform proposals: What potential complications are likely to arise if a single major player in the world's economy unilaterally adopts radical tax reform? The global economy is becoming more and more unified, with multinational corporations dominating world trade and trillions of dollars in portfolio investment flowing across national boundaries. In this economy, what would be the consequences if a single country, …
United States Tax Treaty Policy: An Overview, H. David Rosenbloom, Stanley Langbein
United States Tax Treaty Policy: An Overview, H. David Rosenbloom, Stanley Langbein
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No abstract provided.