Kostelanetz & Fink partner Yoram Keinan participated in the panel entitled “Clearing-Up the Clouds? Proposed U.S. Taxation of Cloud Transactions, Non-Currency Tokens, and other “Digital Assets” PLUS Key Policy Proposals affecting Crossborder Structures & Investments (OECD’s Updated Plan to Alter the Tax Nexus Consensus; Replacing LIBOR)” at the ABA Tax Midyear Meeting on January 31, 2020 at the Boca Raton Resort and Club in Boca Raton, FL, from 9:45-11:30 AM.
On August 9, 2019, the US Treasury released Proposed Reg. §1.861-19, addressing cloud-based transactions and other transactions involving digital content. At the same time, it proposed regulations that would expand and modernize current Reg. § 1.861-18, which classifies transactions involving computer programs. If finalized, these proposals will determine the tax treatment of software and cloud transactions under certain provisions of the 2017 TCJA (e.g., §§ 59A, 245A, 250 and 267A). The proposed regulations would also modernize and expand the software regulations under Reg. § 1.861-18 to cover “digital content.” Certain open questions would be clarified, but other issues would remain unresolved–principally, the source of income generated by cloud computing transactions and other digital activities.
The first 45 minutes of this seminar focused on the tax policy and planning implications of the newly proposed cloud computing and software regulations under § 1.861-19 and -18.
The latter half of the session provided an update on the OECD’s efforts to achieve an international consensus as to whether and how the longstanding “nexus” rules should be altered to accommodate digitalized transactions and economies (and the US Treasury’s latest expressions of concern). Lastly, the panel will discuss the international tax policy and planning implications of the worldwide move to replace LIBOR–the London Interbank Offered Rate, which has long been used as the benchmark for over $350 trillion in financial contracts worldwide—with other benchmarks, such as “SONIA” (Sterling Overnight Index Average), ESTR (Euro Short-Term Rate), SOFR (Secured Overnight Financing Rate), TONAR (Tokyo Overnight Average Rate), and SARON (Swiss Average Rate Overnight). The replacement of LIBOR has far-reaching financial and tax policy implications.
Moderator: Pamela A. Fuller, Royse Law Firm, Tully Rinckey, PLLC, New York, NY
Speakers: Pamela A. Fuller, Royse Law Firm, Tully Rinckey, PLLC, New York, NY; Martin T. Hamilton, Proskauer Rose LLP, New York, NY; Yoram Keinan – Kostelanetz & Fink, LLP, New York, NY; Government Speaker (IRS or Treasury – Invited)
For more information on the ABA Tax Midyear Meeting, please click here.
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