BEPS conference at Bocconi University in Milan

While for technical reasons I can't post my slides from the conference today until I am back in NYC, here are a few quick thoughts inspired by the session, which featured academics, government officials, and practitioners from various countries:

1) Many Europeans take a view of the U.S. check-the-box rules, which permit U.S. multinationals to avoid tax abroad on foreign-to-foreign income-shifting that otherwise would give them U.S. tax liability under subpart F, that is quite different from what one mostly hears in the U.S.  (If I do say so myself, however, I anticipate it in my international tax book.)  To the Europeans, the check-the-box rules, rather than being some dastardly scheme that the U.S. multinationals have managed to put over on the U.S. Treasury due to an inadvertent error in the regulatory process 15 years ago, are a deliberate device in the field of ongoing tax competition that the U.S. uses to benefit its multinationals, by permitting them to avoid foreign countries' taxes more easily.  The parallel they like to cite is the UK's engaging in headquarters tax competition by lowering its corporate tax rate, scaling back its CFC rules, and enacting a low-tax "patent box" regime.

2) For this and other reasons, U.S. willingness to cooperate with EU countries, in the BEPS project and otherwise, is held to be in some doubt.  Along these lines, someone asked the Americans at the conference if we saw any chance that the U.S. would cooperate with ongoing multi-jurisdictional efforts to address VAT evasion cooperatively.  We were skeptical that this would happen, given that the U.S. doesn't have its own VAT.

3) The International Monetary Fund staff has been preparing a report on BEPS-type issues, with particular focus on the issues faced by developing countries, that will probably be publicly available within a few weeks.  This sounds like it is likely to be a very useful and informative document.

4) Speakers from private industry at the sessions emphasized the extent to which managers' efforts at tax reduction, in publicly traded companies, are driven by the objective of not having a higher worldwide effective tax rate than one's peer companies.

5) Milan is currently having a taxi strike that, as I noted in an earlier post, added a touch of adventure to my arrival.  (It may also complicate my departure tomorrow morning.)  The cause, apparently, is that the Uber app, permitting one to arrange car transport services on-line outside of the official medallion system has recently been introduced here, leading to disgruntlement among Milan's taxi drivers, who paid very large amounts for their medallions.  One of the speakers compared the taxi drivers' dilemma to that of countries that still are hoping they can levy significant source-based or residence-based corporate taxes.