Publications

The CRA has recently sought leave to appeal the Federal Court of Appeal decision in Cameco to the Supreme Court of Canada.  Surprised?  If you know basketball, this is the play we all knew we would see.  Many streetball players that move into the gym often like to take shots from low-percentage territory, sometimes far beyond the 3-point line.  After all, there is a lot to brag about if one of these shots drops.  Coaches know the probability of scoring from 3-point range is the same for everyone no matter their skill level: lower than the chance of sinking a layup or a 6-foot jump shot.  Moving successfully from the tarmac to a wood court and a competitive game involves taking a coach’s advice, accepting that probability rules, and adjusting your game accordingly by taking more high-probability shots.  The end result?  Fewer 3-pointers attempted, more… Read More »What next when your transfer pricing approach is 0 for 4 from the 3 point line? (Non-technical)

Following transfer pricing for the digital economy? The OECD wrote to the G20, indicating that the letter from US Treasury remains a political obstacle to taxing the digital economy. Back to Camp Granada to make the best of it.

An early March article in Insights updates on the OECD consensus built around the Unified Approach now being carried forward by the broader international community of tax administrations. Many questions remain to be answered, but there is now direction. Next step is the determination of magnitude. The O.E.C.D. announced on January 31, 2020, that its policy development efforts under Pillar One, related to the taxation of the digital economy, will move forward using the non-consensus “Unified Approach” as a working model.1 In the interest of averting the negative worldwide welfare effects of trade countermeasures to unilateral Digital Services Taxes, the O.E.C.D.’s deadline for obtaining a consensus outcome is highly ambitious. Consensus outcomes for Pillar One and its less controversial, but nonetheless complex, Pillar Two counterpart are expected by the end of 2020 – a relative blink of an eye when we recall that the groundbreaking… Read More »OECD to use hybrid model for digital P.E. and profit attribution

A January 31 announcement from the OECD signals a willingness to work with the Unified Approach to Pillar 1 as drafted by the OECD CTPA Secretariat. Further work and negotiations will proceed at a quick pace through 2020. Some commentary on the challenges identified appears in the January volume of Insights.

A June 2019 article from the Ruchelman PLLC journal Insights about the source of the new interest deductibility rules under U.S. tax reform The limitation of interest deductibility to approximately 30% of E.B.I.T.D.A. (earnings before interest, tax, depreciation, and amortization) introduced in amended Code §163(j) has focused the attention of U.S. corporations and their lenders on a new constraint.  For companies with sales less than $25 million that borrow from a foreign parent, the body of case law in the style of Mixon and Laidlaw has remained the standard against which interest deductibility is evaluated by the I.R.S.  Large subsidiaries of foreign parents that do not qualify for the Code §246 gross sales exemption of $25 million are accustomed to (i) proving their capacity to carry and service debt and (ii) demonstrating that the rate of interest and other terms attaching to a cross-border loan… Read More »Debt characterization under domesticated international rules