Overview
OECD Releases Interim Digital Economy Report: The Organisation for Economic Co-operation and Development (OECD) has released its Interim Report on tax challenges arising from the digital economy. The foreword to the report states: “The integration of national economies and markets has increased substantially in recent years, putting a strain on the international tax rules, which were designed more than a century ago. Weaknesses in the current rules create opportunities for base erosion and profit shifting (BEPS), requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created.” The report was prepared by the OECD’s Task Force on the Digital Economy at the request of the G-20 finance ministers. Building on the 2015 BEPS Action 1 Report, the Interim Report includes an in-depth analysis of the changes to business models and value creation arising from digitalization, and identifies characteristics that are frequently observed in certain highly digitalized business models.
Miscellaneous Guidance:
Revenue Ruling 2018-09 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by section 1274.
Revenue Procedure 2018-21 modifies IRS procedures for issuing opinion and advisory letters for pre-approved master and prototype and volume submitter plans as provided in Revenue Procedure 2015-36. In particular, the revenue procedure modifies sections 6.03(7)(c) and 16.03(7)(c) of Revenue Procedure 2015-36 to allow pre-approved defined benefit plans containing a cash balance formula to provide for the actual rate of return on plan assets as the rate used to determine interest credits. The revenue procedure also modifies section 6.03(7)(c) of Revenue Procedure 2017-41 relating to the rates that are permitted to be used to determine interest credits in pre-approved defined benefit plans containing a cash balance formula. In addition, the revenue procedure changes references to “hypothetical interest” and “hypothetical interest credits” in Revenue Procedure 2015-36 to “interest credits,” consistent with terminology in Revenue Procedure 2017-41.