A Tax on Aggressive Tax Planning

Tax planning by multinational enterprises (MNEs) is estimated to generate a worldwide loss of corporate tax revenues of between $100 billion and $240 billion. U.S.-based MNEs alone are believed to retain a total of $2 trillion in earnings outside the U.S., largely for tax reasons. Over the last few years, the Organization for Economic Cooperation and Development (OECD) has been trying to come to grips with the tax reduction strategies of MNEs. Its results, presented in the 2015 final reports of BEPS (Base Erosion and Profit Shifting) have disappointed many. That is understandable: Most of the proposals depend on further … Read more

Arnold & Porter Discusses Trump’s Buy American and Hire American Executive Order

The United States has long offered its domestic industrial base preferential treatment in the Federal government marketplace through laws and regulations requiring agencies to prefer purchase of American-made products and contracts with American companies, and only resort to other sources in circumstances of genuine need. On April 18, 2017, President Trump issued an Executive Order (Order) intended to emphasize and potentially strengthen these policies. The Order, entitled “Buy American and Hire American,” defines “Buy American Laws” as “all statutes, regulations, rules, and Executive Orders relating to Federal procurement or Federal grants”—including those that refer to “Buy America” or “Buy American”—“that … Read more

Kirkland & Ellis Discusses Trump’s Trade Agenda

In late March, the Trump administration took several steps to begin implementation of its “America First” international trade agenda. We note three actions in particular:

First, President Trump signed an executive order directing the Secretary of Commerce and the U.S. Trade Representative (“USTR”), in conjunction with other agencies, to issue a report within 90 days identifying foreign trade partners with which the United States has a significant trade deficit;

Second, President Trump signed an executive order instructing the Department of Homeland Security and other agencies to increase enforcement of collection of unpaid antidumping and countervailing duties; and

Finally, the USTR … Read more

Cleary Gottlieb on the Trade Implications of Brexit

The UK Government triggered on March 29, 2017, Article 50 TEU.  As a result, the UK is likely to have exited the EU by March 2019.

In a speech delivered on January 17,  Prime Minister (“PM”) May explained that the UK would not seek to be part of the EU’s customs union, but would instead look to establish a “comprehensive” trade agreement with the EU.  In tandem, she noted that the UK would no longer accept the jurisdiction of the European Court of Justice.

How Will a Post-Brexit Future Relationship be Achieved?

1.      The Current Situation

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Latham & Watkins on Defining Foreign Private Issuers: Wizard or Muggle?

The world of Harry Potter is divided into wizards and muggles, those who can work magic, and those who (sadly) cannot. In the world of US federal securities laws, the division between domestic US companies and foreign private issuers, or FPIs, is just as important. While FPIs don’t have magical powers — at least that we know of — FPIs do enjoy some very important advantages under special rules and accommodations established by the US Securities and Exchange Commission (SEC).

How do you know if you are a foreign private issuer?

A company must pass one of the following tests … Read more

Debevoise & Plimpton Discusses EU’s Approach to Financial Services “Equivalence” Decisions

On February 27, 2017, the European Commission published a Staff Working Document[1] containing an assessment of EU equivalence decisions in financial services policy.[2] Equivalence decisions are a core element of the Commission’s international strategy for financial services and provide benefits for both EU and third-country financial markets. If the Commission determines that a third country’s regulatory, supervisory and enforcement regime is “equivalent” to the corresponding EU framework in a particular market sector, that recognition usually makes it possible for authorities in the European Union to rely on supervised entities’ compliance with the equivalent foreign framework.

This reduces or … Read more

Kirkland & Ellis Discusses the Trump Administration’s National Trade Policy Agenda

On March 1, 2017, the Office of the U.S. Trade Representative (“USTR”) released its National Trade Policy Agenda for 2017 (“Trade Agenda”) describing the President’s trade policy objectives. The Trade Agenda is consistent with President Trump’s campaign promises to fundamentally alter U.S. trade policy by pivoting away from multilateral negotiations and organizations. As a result, companies with any international dealings should closely follow the Trump Administration’s implementation of this significant change of course in U.S. trade policy.

  1. Key Objectives of the Trade Agenda

The Trade Agenda sets out several customary international trade goals, such as increasing economic growth and job … Read more

Arnold & Porter Discusses Data Protection in the EU

2017 has started with a bang on the data protection front. The new EU General Data Protection Regulation (GDPR) which is intended to harmonise data protection legislation across the EU, was adopted in April last year and is due to come into force in May 2018. The UK’s data protection regulator (the Information Commissioner’s Office, or ICO) has been consistent in its support for preparation of the GDPR in the UK following the Brexit vote last year. In January this year, we saw the ICO provide an update on the GDPR guidance that it will be publishing for organisations in … Read more

PwC on Basel Committee’s Views of its Fundamental Review of the Trading Book

On January 26 the Basel Committee on Banking Supervision (BCBS) released its first set of Frequently Asked Questions (FAQs) on the Fundamental Review of the Trading Book (FRTB). The BCBS published the FRTB in January 2016 with the intent to harmonize (i.e., reduce variability) the treatment of market risk across national jurisdictions.[1] It will generally result in higher global capital requirements.

The BCBS calls for each jurisdiction to finalize implementation of the FRTB before January 2019 and for compliance to begin by December 2019. We do not expect US regulators to adopt the standard until 2018 at the earliest … Read more

K&L Gates Discusses the Border Adjustment Tax

The House Republicans have proposed sweeping changes to the U.S. tax system, specifically that income from the export of goods, services and intangibles will not be subject to federal income tax, and that the cost of such imports into the U.S. will not be deductible. By incentivising exports and deterring imports, the proposed “Border Adjustment Tax” (BAT) is intended to increase domestic production, strengthen the U.S. economy and create new jobs, and deter corporate inversions and erosion of the U.S. tax base. It also is estimated to pay for approximately one-third of the cost of the Republicans’ comprehensive tax reform … Read more

PwC Explores Whether Trump Will Stay the Course on Sanctions

President Trump made many statements during the campaign regarding actions he plans to take to reverse Obama administration sanctions policies.[1] These included revisiting the agreement to ease sanctions on Iran, rolling back the sanctions program against Russia, and reversing the Obama administration’s policy of easing sanctions on Cuba. However, we believe that reversing course on these policies is much easier said than done.

For example, several of the Obama administration’s sanctions policies – including those involving Iran and Russia – were part of multilateral actions rather than unilateral sanctions programs, so breaking from such agreements will be difficult. Iran … Read more

Gibson Dunn Discusses Antitrust in China

China’s antitrust regulators have continued to increase their enforcement of the Anti-Monopoly Law (“AML”) in 2016.  Given the high level of scrutiny in this area and the current legal environment in China, compliance with the AML should be a priority for businesses operating in China.

2016 saw the publication of a number of draft guidelines, outlining the regulators’ proposed approach to many important areas in antitrust enforcement, including leniency, the calculation of fines, and application of the AML to the automotive industry.  Currently, discussions are also under way for highly anticipated draft guidelines on the application of the AML to … Read more

The Legacy of the Sarbanes-Oxley Act, 15 Years On

What does Sarbanes-Oxley mean? That’s when two members of U.S. Congress fiddle and half a million accountants in Europe start dancing.”[1]

President Donald Trump pledged during his electoral campaign to repeal some of the reforms that came about after the 2008 financial crisis, including the Dodd-Frank Act of 2010[2], declaring that the coming administration would seek to remake the way the U.S. oversees the financial sector. This has led some commenters to go even further back in time and call for the repeal of the Sarbanes-Oxley Act of 2002 (‘Sarbanes-Oxley”).[3]

Sarbanes-Oxley[4] was enacted by … Read more

Paul Weiss Discusses FCPA Enforcement and Anti-Corruption Developments

2016 was, by any measure, an extraordinary year for the enforcement of the Foreign Corrupt Practices Act.  The Department of Justice and the Securities and Exchange Commission assessed a record-shattering total of nearly $2.5 billion in penalties.  But despite those record numbers, open questions remain as to the impact of the Yates Memo, which instructs prosecutors to focus on prosecutions of individuals, and of the FCPA Pilot Program, which encourages corporate self-reporting of wrongdoing.  Looking at anti-corruption developments more broadly, we see notable increases in the extent and sophistication of international cooperation and coordination and in the activities of the … Read more

Financial Deregulation: Repeal or Adjust?

While a major overhaul of U.S. financial regulation may be unlikely during the early months of the Trump administration, changes should be expected as his nominees to lead the Treasury Department and financial regulatory agencies are confirmed. This will be the biggest turnover in regulatory leadership since the passage in 2010 of the Dodd-Frank Act, and it may also prove to be a test for Basel III, the macro-prudential policy framework created by the G20 countries in response to the 2007-2008 financial crisis.

Dodd-Frank, which has not been fully implemented, is the legislative vehicle for U.S. integration of Basel III … Read more

Debevoise Looks at UK’s Initial Move to Expand Corporate Criminal Liability

On January 13, the UK Government took a step towards significant reform of the business crime landscape by issuing a formal “call for evidence” in relation to corporate liability for economic crimes such as fraud, false accounting and money laundering. While only the initial step – the next stage will involve a full consultation on a detailed proposal and draft legislation – it potentially heralds a new era of increased corporate exposure to prosecution.

Any changes that are enacted are broadly likely to take the form of corporate offenses similar to section 7 of the Bribery Act 2010 (failure to … Read more

K&L Gates Discusses the Border Adjustment Tax

Thanks to the Republican sweep of the White House and the Congress, all the talk in recent years about tax reform is on the verge of turning into action.  What many dismissed as idle chatter before Election Day suddenly became very real as the prospect of passing tax reform by using the budget reconciliation mechanism requiring only 51 votes in the Senate turned from a pipedream into reality.  But, with so many tax reform options on the table, how do you know what to focus on?   What ideas are worth explaining to the C Suite, running diagnostics, and spending resources … Read more

K&L Gates Discusses Trump’s Plan to Make Mexico Pay for the Wall

One of the most significant post-election questions for the financial-services industry—particularly global financial institutions that move money across borders—is, what is the status of President Trump’s proposal to tax electronic remittances to Mexico to pay for the wall between Mexico and the United States?

Mr. Trump’s Proposal

During the 2016 Republican presidential primaries, Mr. Trump laid out various ways to force Mexico to pay for a wall along the U.S.-Mexico border in a two-page memo[1] to The Washington Post,[2] which is now linked to the immigration section of Mr. Trump’s transition website.  The first proposal listed is … Read more

Debevoise Explores Expanded Civil Liability for Terrorism

On September 28, 2016, the U.S. Congress expanded civil liability for foreign countries and international businesses by enacting the Justice Against Sponsors of Terrorism Act (“JASTA”), overriding President Obama’s veto for the first time in his Presidency. While Congress ostensibly directed JASTA at claims brought by victims of the September 11 attacks, the law’s effect could be far broader and reach a wide array of actors. As a result, companies may wish to consider adding anti-terrorism screening to their regular due diligence and compliance procedures.

JASTA makes two major changes to existing federal law. It withdraws the sovereign immunity protection … Read more

Cleary Gottlieb Explores What’s Next in UK Corporate Governance Reform

On November 29, 2016, Prime Minister Theresa May’s government issued a green paper[1] (the “Green Paper”) to canvass opinion on proposed reforms to the UK’s corporate governance framework.

A green paper is a government consultation document that invites feedback from interested parties (both within Parliament and outside it) on legislative proposals. The document does not form part of the legislative process and is non-binding in nature, and the government has stressed that it is not currently advocating any one proposal. Therefore, while the content of the Paper provides some guidance as to the government’s current thinking on … Read more