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North American Edition
29th July 2021
Drug companies push back on global tax deal
Pharmaceutical executives, lobbyists and consultants are citing the sector’s involvement in the fight against Covid-19 as they quietly push back against a deal by many of the world’s biggest economies to better harmonize corporate taxation throughout the world. A total of 130 countries have broadly agreed to a deal that would establish a minimum corporate tax of 15% within their countries, so reducing opportunities for international tax avoidance. “We led the world in responding to this pandemic,” is how one drug company executive described a key industry message, reports the Wall Street Journal. Ipsita Smolinski, of U.S. health care policy consulting firm Capitol Street, said: “There certainly is a halo from Covid,” but cautioned “I think that halo will wear off.” Richard Collier, who teaches international tax law at the University of Oxford in the U.K., says the industry “has done a lot of tax planning and has put a lot of intangibles into tax havens,” and in the wake of the global tax framework, “The ground has shifted for the worse.”
Generation gap emerges over remote work
Decisions to return to the office are pitting older managers who privilege working on-site against younger employees who now view operating remotely as the ‘new normal,’ reports the New York Times, noting that some new hires have never gone into their employers' place of work. David Gross, an executive at a New York-based advertising agency, and an advocate of the office, said: “Frankly, [younger employees] don't know what they're missing, because we have a strong culture . . . Creative development and production requires face-to-face collaboration. It's hard to have a brainstorm on a Zoom call.” But Rebecca L. Ray, executive vice president for human capital at the Conference Board, and referencing a reluctance to return to the office amid the rise of the Delta variant of the coronavirus in recent days, advises: “Among the generations, millennials are the most concerned about their health and psychological well-being . . .  Companies would be well served to be as flexible as possible.”
Google workers will need Covid shots to return to office
Google workers will need to be vaccinated before returning to the office, the U.S. tech giant has said. The policy will begin at the company’s U.S. campuses within weeks and then be rolled out globally for its 144,000 employees. Google CEO Sundar Pichai said in a blog post that "anyone coming to work on our campuses will need to be vaccinated." How the policy is implemented "will vary according to local conditions and regulations, and will not apply until vaccines are widely available in your area," he said. In addition, Google will extend the full reopening of its global campuses from September 1st to October 18th due to an increase in cases caused by the Delta variant of coronavirus. People in special circumstances can apply to work from home until the end of 2021. However, any Google employee can apply to work from home permanently if they choose, and transfer offices. Google expects that over time in any given week, 60% of employees will work in the office for a few days each week, one-fifth will be working in new office locations and another fifth will be working from home. Google's decision to extend remote-working follows a similar move by Apple, which recently also moved its return-to-office plans from September to October.
Hiring remains a struggle for McDonald's even as sales surpass pre-COVID levels
McDonald's reported yesterday that its global sales are surpassing pre-pandemic levels across the world as more of its dining rooms reopen and U.S. customers try new chicken offerings. The fast-food chain said its second-quarter sales hit $5.9bn, up 57% from a year earlier, when it was hit by COVID-19 lockdowns. Analysts expected sales of $5.6bn. Global same-store sales in the three months to the end of June were 7% higher than in the same period of 2019. Chief executive Chris Kempczinski commented that hiring remains a struggle in the U.S., adding a few seconds to fulfilling orders. He said that boosting wages and benefits is helping, and that hiring is swifter in states that ended federal supplemental unemployment benefits before they are set to expire. “We’re going to continue to make progress but it certainly is a challenge."
Dealing with unconscious bias
Reuters speaks with Kara Helander, chief diversity, equity and inclusion officer at private equity firm the Carlyle Group. Unconscious bias training is being launched across Carlyle's workforce of 1,800 employees. “We all have biases, because of how we have been socialized. What is core for us is to make sure we as individuals take responsibility for these biases. If you understand that bias, you can take steps to mitigate it. We want to give people concrete insights and tools they can use every day,” says Helander. Carlyle’s program, called “Better Decisions,” has the ultimate goal of understanding unconscious bias in order to offer the company a competitive advantage, she says.
Judge clears PwC of whistleblower allegations
A San Francisco federal judge has ruled that PwC was justified in firing a former auditor and didn’t retaliate against him for submitting a whistleblower complaint to the Securities and Exchange Commission (SEC) alleging the firm was too cozy with a client. Magistrate Judge Alex Tse of the U.S. District Court for the Northern District of California said Mauro Botta, a former senior manager at PwC, didn’t qualify for whistleblower protections under the 2002 Sarbanes-Oxley Act after he raised questions about his former firm’s independence from its clients to the SEC. Mr. Botta sued his former employer in 2018, claiming he was fired in retaliation for sending a whistleblower letter to the SEC. He claimed he was removed from assignments at the request of clients after he questioned internal controls designed to ensure reliable financial reporting. Tse found that Mr. Botta didn’t prove that PwC had violated any laws, a burden necessary to trigger the protection from retaliation.
Race-based schedule changes can violate Title VII, says appeals court
An appeals court has revived claims that the City of Cleveland violated federal anti-discrimination law by assigning Black EMS workers to a night shift to avoid having an all-Black team working during the day. Employees' shifts amount to "terms of employment" under Title VII of the Civil Rights Act of 1964, so changing them because of a workers' race can qualify as discrimination under the law, a unanimous three-judge panel of the 6th U.S. Circuit Court of Appeals said. Title VII prohibits discrimination "against any individual with respect to his compensation, terms, conditions, or privileges of employment."
IRS sued over data collected from crypto accounts
A New Hampshire man is suing the IRS, claiming the agency violated his constitutional rights by obtaining his financial information from cryptocurrency databases. James Harper received a letter from the IRS in 2019 suggesting one or more of his virtual currency accounts may not have properly been reported for tax purposes. He accuses the IRS of violating his contracts between him and at least one of his digital currency accounts. The contracts guarantee the companies will “provide robust protections” to private financial data, according to the complaint. Adi Dynar, a lawyer litigating Mr. Harper’s case, said what the IRS did to his client was “unprecedented.” “It apparently obtained the private financial information of 10,000-odd digital currency users, not from the users themselves, but by strongarming at least one digital-currency exchange. Tellingly, IRS is now asking for Congressional authorization after the fact, which implies that permission was lacking when IRS intruded on taxpayers’ privacy,” he said. A spokesperson from the IRS said the agency will not comment on pending litigation.
Loosening of City rules may see Spac deals surge
London could see a surge in blank check company flotations after the U.K.'s Financial Conduct Authority (FCA) relaxed proposed rules on special purpose acquisition companies, or Spacs – entities that raise cash from investors through flotations and later find operating businesses to buy. Under previous rules, shares in Spacs were suspended when a target company was identified, effectively trapping investors and discouraging them from participating in the U.K. market. The City watchdog in April had proposed an easing of the rules, waiving the suspension rule if a Spac raised at least £200m ($280m) from its float. The regulator has now cut this to £100m in its final version of the rules.  "The final rules aim to provide more flexibility to larger Spacs, provided they embed certain features that promote investor protection and the smooth operation of our markets," the FCA said in a statement. The FCA is also giving Spacs an extra six months to clinch a deal before needing to seek shareholder approval to extend their life.
CalSTRS reports record-high investment gains
The California State Teachers’ Retirement System (CalSTRS) has reported a 27.2% return on its investments for the fiscal year that ended in June, a record high driven by a booming stock market and private equity gains. The return drove the total value of its investment fund to $308.6bn, up from $246bn a year earlier. The system, which administers retirement benefits for about 975,000 teachers, retirees and beneficiaries, is the second-largest state-run pension system in the U.S., after the California Public Employees’ Retirement System. The record-high returns follow a volatile year during which stocks initially plummeted as a result of the coronavirus before rebounding to new record highs as corporations thrived and the federal government took actions to stimulate the economy. CalSTRS’ stock holdings grew 41.8% for the year, while its private equity investments returned 51.9%, according to the release.
IASB proposes IFRS Standard for non-public subsidiaries
The International Accounting Standards Board (IASB) has proposed a new IFRS Standard to enable eligible subsidiaries to apply the standards with a reduced set of disclosure requirements. The proposals are intended to ease financial reporting for eligible subsidiaries. They eliminate the need to maintain an additional set of accounting records for reporting purposes, and also reduce the disclosures required to comply with IFRS. The board said the proposed standard would be available to "subsidiaries without public accountability" — companies that are not financial institutions or listed on a stock exchange — whose parent company prepares consolidated financial statements applying IFRS.
Boohoo ends partnership with U.S. rapper DaBaby
Online fashion retailer Boohoo has ended its partnership with rapper DaBaby, after he made homophobic comments onstage at a Florida music festival. "Diversity and inclusion are part of the Boohoo Group's DNA and we pride ourselves on representing the diverse customers we serve across the globe", the U.K. based company said in a statement. "We stand by and support the LGBTQ+ community, and do not tolerate any hate speech or discrimination in any form".
Even in space you can't escape taxes
Rep. Earl Blumenauer (D-Ore.) has said that space tourists — and the companies that ferry them — should pay taxes on their flights. Blumenauer said: "Space exploration isn’t a tax-free holiday for the wealthy. Just as normal Americans pay taxes when they buy airline tickets, billionaires who fly into space to produce nothing of scientific value should do the same, and then some." Blumenauer announced his plans on the same day Jeff Bezos and three others launched into space on a rocket developed by the Amazon founder’s space company, Blue Origin. 

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