Europe:
EU to reform sales tax, end appeal of low-rate states in blow to Amazon
The European Commission will propose on Wednesday changes to the way sales taxes are levied in the European Union with the aim of tackling fraud and curbing firms’ excessive tax-planning, a move that could hit U.S. online retailer Amazon (AMZN.O). The plan is part of a broader EU campaign for fairer corporate taxation following revelations that many companies exploit loopholes in the EU’s single market to ensure they pay little or no tax in Europe. In a draft document to be published on Wednesday, the EU’s executive Commission will propose that value-added tax (VAT) in a cross-border trade be charged at the rate set by the country where the buyer is located, rather than in the seller’s home as now. The aim is to reduce billions of euros of tax revenues lost to some EU states each year. The change is also likely to eliminate the incentive for exporting firms to base themselves in countries with low VAT rates. “With goods and services being taxed in the member state of destination, suppliers derive no significant benefit from being established in a lower-rate member state,” the Commission said in a document seen by Reuters. Luxembourg and Malta currently apply the lowest VAT “standard” rates in the 28-country EU on most products. Some countries, including Luxembourg and Ireland, also charge a super-reduced VAT rate for certain goods.
U.S.:
U.S. Stocks, Dollar Mixed as Tax Reform Hits Bump: Markets Wrap
U.S. equities fluctuated near records, while the dollar’s rally stalled near a two-month high as investors assessed the prospects for tax reform after a Republican senator raised concern it could balloon the deficit. The S&P 500 Index continued to trade near all-time highs along with other U.S. gauges. The dollar retreated after touching the highest level since July and 10-year Treasury yields neared 2.34 percent. Stocks in Europe fluctuated, shrugging off rallies in Asian markets where Japanese shares closed at their highest in more than two years and developing nation equities jumped. Oil fell toward $50 a barrel. Traders appear to be taking stock after the themes of tighter U.S. monetary policy, a potentially more hawkish Federal Reserve chief and strong U.S. PMI data helped to drive recent gains for both the dollar and equities. Goldman Sachs Group Inc. analysts see the greenback as having room to run, thanks to solid growth prospects and the chance that Fed interest-rate hikes will prove more aggressive than market players currently anticipate.
Asia:
Brazil to sell 10-year dollar-denominated bond
Brazil’s government announced it will sell a 10-year dollar-denominated bond on Tuesday, as part of efforts to refinance debt. Bookrunners Deutsche Bank, Itau BBA and Santander expect to price the deal later in the day, the Brazilian Treasury said. Initial price thoughts on the 10-year senior unsecured U.S. dollar bond were at around 250 basis points over U.S. Treasuries, according to Thomson Reuters’ IFR.