International News: Spotlight on Tax

It is always the case that businesses must keep up with changes to tax rules, but never have tax rules had to pay equally close attention to changes in business. The evolution of technology and the internet age have driven seismic shifts in the ways companies operate, and presented new challenges for tax regimes.

The long-awaited Organisation for Economic Co-operation and Development (OECD)/G20 Global Anti-Base Erosion Model Rules, intended to address perceived challenges to longstanding international taxation principles by the increasing digitalisation of the economy, are coming closer to becoming a reality with the agreement by 137 OECD/G20 countries and jurisdictions to join the official statement of the Two-Pillar Solution. But we’re still not there yet. Similarly, despite the Non Fungible Token (NFT) market being worth US$21 billion, the US Internal Revenue Service (IRS) still hasn’t explicitly stated how NFTs will be taxed.

Without clear rules and guidance, businesses need to be highly vigilant. The continuing trend of working outside the office means international companies must ensure their remote workforce doesn’t inadvertently trigger tax liabilities by creating a permanent establishment or permanent representative; and trustees must undertake regular reviews to ensure changes within the trust don’t generate new taxable events. In addition, companies need to be aware of how expected changes to tax laws may be more aggressive than anticipated, such as the withdrawal by the US IRS of certain foreign tax credits.

Please contact the authors directly if you have any comments on our articles, or would like to discuss any of the issues raised.