Bramwell's Lunch Beat: US/EU Tax Spat, Internet Tax Ban, Boeing to Face SEC Probeby
US Treasury’s Lew challenges EU on corporate tax investigation
The United States stepped up a spat with European Union (EU) officials concerning their investigations of US companies’ tax practices, warning in a letter that they are creating a “disturbing” precedent, wrote Richard Rubin of the Wall Street Journal. US Treasury Secretary Jack Lew, in the letter to European Commission President Jean-Claude Juncker, asked European officials to rethink the probes, saying they “undermine the well-established basis of mutual cooperation and respect that many countries have worked so hard to develop and preserve.” US companies whose tax practices are under investigation include Apple Inc. and Amazon.com Inc. European regulators have been investigating whether individual countries’ tax breaks for certain companies violate rules against excessive “state aid.” If deemed illegal, European officials could then press the countries to recover corporate funds related to the tax breaks.
Congress approves permanent Internet access tax ban
The Senate on Thursday passed legislation placing a permanent ban on states’ taxing Internet access, sending the measure to President Obama for signing into law, wrote Richard Cowan of Reuters. By a vote of 75-20, the Senate gave final approval to a bill toughening enforcement of US duties on foreign goods, which contains the permanent extension of the Internet Tax Freedom Act. The measure also would ban some taxes on digital goods and services, and will put an end to a series of temporary extensions on the tax prohibitions. “Most Americans pay $0 in taxes to connect to the Internet. And thanks to a bill that passed today, you will never have to pay taxes just to get online, or pay more taxes for goods and services just because they’re bought online,” Sen. Ron Wyden (D-OR) said in a statement.
Mylan CEO: Don’t see a presidential candidate’s tax plan I like
Mylan CEO Heather Bresch said on Thursday that she has not yet seen a tax plan put forward by any of the presidential candidates that would make American companies competitive enough and convince her to bring the generic drugmaker back to the United States, Reuters and CNBC reported. “I’ve heard a lot of talk. I’m disappointed actually that on both sides of the aisle the rhetoric is that just companies are fleeing and it’s the companies’ problem, not the country’s problem,” she told CNBC’s Squawk Box. Last year, Mylan bought Abbott Laboratories’ branded specialty and generics business in developed markets outside the United States in a $5.3 billion transaction that bolstered its product line and also cut its tax bill. The deal was structured as an inversion to help Mylan reduce its tax liability by moving its tax address outside the United States.
Boeing to face SEC probe of Dreamliner and 747 accounting
The US Securities and Exchange Commission (SEC) is investigating whether Boeing Co. properly accounted for the costs and expected sales of two of its best-known jetliners, wrote Robert Schmidt, Julie Johnsson, and Matt Robinson of Bloomberg. The probe, which involves a whistleblower’s complaint, centers on projections Boeing made about the long-term profitability for the 787 Dreamliner and the 747 jumbo aircraft. Both planes are among Boeing’s most iconic, renowned for the technological advancements they introduced, as well as the development headaches they brought the company. Underlying the SEC review is a financial reporting method known as program accounting that allows Boeing to spread the enormous upfront costs of manufacturing planes over many years. While the SEC has broadly blessed its use in the aerospace industry, critics have said the system can give too much leeway to smooth earnings and obscure potential losses.
Hoogervorst re-appointed as IASB chairman
Hans Hoogervorst has been reappointed for a second, five-year term as chairman of the International Accounting Standards Board (IASB), which writes accounting rules used in more than 100 countries, the board’s trustees said on Friday, wrote Huw Jones of Reuters. Hoogervorst, a former Dutch finance minister and markets regulator, starts his second term in July. The London-based IASB also said its vice chairman, Ian Mackintosh, has decided to retire at the end of his first term. A key success for Hoogervorst in his first term was getting a deal on reforming accounting rules for leases in the teeth of industry opposition. But he has expressed disappointment that he has not been able to persuade the United States to adopt IASB rules to make them truly global.