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1 Sebastian Duenas, CFC Rules around the World 1 (2019)

handle is hein.taxfoundation/cfcatw0001 and id is 1 raw text is: CFC Rules Around the World FISCAL FACT No. 659 Jun. 2019 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, local, and global levels. We are a 501(c)(3) nonprofit organization. @2019 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoLndation.org Sebastian Duefias* Researcher Introduction The Organisation for Economic Co-operation and Development (OECD's) search for a solution to taxation of the digitalized economy has led it to consider a global minimum tax as part of a broader anti-base erosion proposal.' Because a minimum tax could be based on the structure of existing controlled foreign corporation rules (CFC rules), a review of countries' CFC rules is timely. In general, these rules target multinational companies' ability to shift passive or other types of mobile income to low-taxed jurisdictions. While to some degree these rules follow a similar template around the world, in other respects they vary by jurisdiction. A review of these similarities and differences is important as international organizations and individual countries consider expanding these rules to better address challenges of multinational tax avoidance in the 21st century. One question that may be considered as the OECD evaluates recommendations for a minimum tax is the extent to which such a regime may be based on the reforms adopted by the United States in 2017. In the Tax Cuts and Jobs Act (TCJA), the United States enacted a provision called the Global Intangible Low-Taxed Income (GILTI, Section 951A).2 This rule, while built on the existing Subpart F edifice, departs from that structure in important respects. It is questionable whether the mechanism by which it is imposed means that it should properly be called a minimum tax or simply an expansion of a CFC regime. The mechanics of the U.S. GILTI regime and its function as a minimum tax will be important to examine as the rest of the world considers whether to adopt a similar-or different-minimum tax, or to adopt one at all. This paper undertakes a review of CFC rules around the world as a contribution to the global discussion over the possible expansion of existing anti-base erosion CFC regimes or the potential adoption of a minimum tax. It is organized in six parts. Part I reviews the history of adoption of CFC rules around the world (focusing on the countries identified below) including the initial adoption of subpart F by the * University of Florida visiting scholar. 1 OECD, Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalisation of the Economy,' May 31, 2019, https://www.oecd.org/tax/beps/programme-of-work-to-develop-a-consensus-solution-to-the-tax- chaIlenges-arising-from-the-digitaIisation-of-the-economy.pdf. 2 Unless otherwise noted, all section references are to the Internal Revenue Code of 1986, as amended.

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