June 08, 2017

The Implications of the International Tax Treaty on Your Business

How this treated could affect your business.

 

One June 7, 2017, more than 70 countries joined together in Paris France to sign The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The tax treaty, abbreviated as MLI, was not signed by 68 other countries, including the United States.

The tax pact was designed to promote financial transparency and contest tax avoidance by multinational corporations. According to Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency (FACT) Coalition, “Tax dodging by large multinationals is a global problem that costs American taxpayers in excess of $130 billion per year—more than any other country.”

Although the U.S. did not sign the treaty, they were instrumental in participating in the development of the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting agreement under Obama.

The U.S’s refusal to sign could be due to the fact it already has measures in place in current treaties. According to Bloomberg News reports, the U.S.  has tough anti-abuse tax provisions and the MLI can still be successful. Will Morris, tax committee chairman of the Business and Industry Advisory Committee surmises about the new treaty, “The improvements to mutual agreement procedures and, even more, the group of core countries entering into mandatory binding arbitration will be a huge plus for business.”

The first changes to the tax treaty will take place in 2018 with no consideration for grandfathering, states the Bloomberg news article.

Effects of U.S.’s Decision on Your Business

 The codes and laws governing business taxation are always changing. We’ve seen the impact of the news of the MLI treaty headlined in the news.  Is your business compliant? Are you aware of the implications not being compliant can have on your business?  What steps do you take to make sure you are paying the proper taxes? Will this new treaty affect your corporation or partnership?

 Keeping up with the tax modifications internationally or even in our own neighborhood is an important step in helping clients deal with the impact of taxes in their lives. If you are unaware of international tax modifications and how they can affect you and or your business, you should consult an experienced tax attorney.

Mendes Weed, LLP Advocates for Your Tax Rights

As one of their principal attorneys, Christina Weed is an advocate for your rights.  Christina assists clients in the areas of tax law, business law, and estate planning in both transactional and litigation matters.

Keeping up-to-date with the trends in her areas of practice is just one way Christina assists clients. If you would like to connect with Christina, please give Mendes Weed, LLP a call at 925-390-3222.  We are here to help. We have offices in Walnut Creek, San Francisco and Sacramento and we serve clients in Walnut Creek, Alamo, Danville, Blackhawk, Pleasanton, Livermore, Solano County Alameda County, San Mateo County, Santa Clara County, Sacramento and San Francisco.

Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.