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28th July 2021
Big Pharma pushes back on global tax deal
Big drug companies and their lobbyists are mobilizing against  a sweeping agreement by many of the world’s biggest economies to better harmonize corporate taxation around the globe. Earlier this month, 130 countries agreed to broad outlines of a deal that would, among other steps, establish a minimum corporate tax of 15% within their countries, reducing opportunities for international tax avoidance. Lawyers and company officials estimate the tax overhaul, if adopted, could cost some of the biggest pharmaceutical companies hundreds of millions of dollars more each year. In private industry meetings and discussions with congressional staffers, drug company executives and lobbyists are seeking to use the industry’s pandemic role as leverage, according to people familiar with the effort. “We led the world in responding to this pandemic,” is how one drug-company executive described a key industry message. Pharmaceutical companies are particularly vulnerable to proposed tax changes because they have global operations that sell products around the world. “Pharma has done a lot of tax planning and has put a lot of intangibles into tax havens,” said Richard Collier, who teaches international tax law at the University of Oxford and advised on the global tax framework. The bottom line for the industry, he said, is: “The ground has shifted for the worse.”
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FIRE security requirements to be strengthened
The security requirements for tax professionals using the IRS' system for electronically filing information returns are being strengthened. The agency is improving the Filing Information Returns Electronically, or FIRE, application process for new users, who will be required to authenticate their identities and create a new account through the IRS Secure Access Account to access the new online Information Return Application for Transmitter Control Code. Current users of the Secure Access accounts will be able to use their existing accounts for now. However, in late 2022, to secure the FIRE system even further, existing FIRE users will also be required to move to the stronger identity-proofing authentication process. The target timeframe for that move is fall 2022.
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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.
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U.S. home-price growth rose to record rate in May
Home-price growth climbed to a new record in May, as low mortgage interest rates continued to drive robust homebuying demand. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 16.6% in the year that ended in May, up from a 14.8% annual rate the prior month. May marked the highest annual rate of price growth since the index began in 1987. The Case-Shiller 10-city index gained 16.4% over the year ended in May, compared with a 14.5% increase in April. The 20-city index rose 17%, after an annual gain of 15% in April. Price growth accelerated in all 20 cities. Also on Tuesday, the Commerce Department reported that the homeownership rate slipped to 65.4% in the second quarter, down from 67.9% a year earlier. For households headed by someone under 35 years old, a key source of homebuying demand, the homeownership rate fell to 37.8% from 40.6% a year earlier.
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U.S. consumer confidence holding steady
U.S. consumer confidence improved for a sixth straight month in July to a fresh pandemic high as Americans grew more optimistic about current business and labour market conditions. The Conference Board’s index rose to 129.1 from a revised 128.9 reading in June. Economists in a Bloomberg survey had called for a decline to 123.9. “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in third quarter is off to a strong start”, said Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve".
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Remington offers $33m to families of Sandy Hook victims
Remington Arms Co. has offered to pay nearly $33m to nine families to settle lawsuits claiming that its marketing of firearms contributed to the 2012 Sandy Hook school massacre in Newtown, Connecticut, where 26 people died. The Sandy Hook families have sought to prove that Remington violated the Connecticut Unfair Trade Practices Act by marketing what it knew was a weapon designed for military use to civilians such as the shooter, who used a Bushmaster AR-15 in the attack. Remington had filed for Chapter 11 protection in 2018 and emerged the same year under the control of its creditors. It filed for bankruptcy again in July 2020, after more retailers restricted gun sales following other school shootings.
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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.
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A 'real shooting war' could be the result of cyber-attacks, Biden says
President Joe Biden has said that a significant cyber-attack on the U.S. could precipitate a “real shooting war” with a “major power,” highlighting what Washington sees as growing threats posed by Russia and China. “I think it’s more than likely we’re going to end up, if we end up in a war - a real shooting war with a major power - it’s going to be as a consequence of a cyber breach of great consequence and it’s increasing exponentially, the capabilities,” Biden said during a half-hour speech while visiting the Office of the Director of National Intelligence (ODNI). His comments came in the wake of a string of high-profile attacks on organizations including network management company SolarWinds, the Colonial Pipeline company, meat processing company JBS and software firm Kaseya. Reuters notes that the attacks affected the U.S. far beyond their immediate targets, hitting fuel and food supplies in parts of the country.
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Independent oil refiner dodged $2bn tax, says China state newspaper
Private oil refiner Hengli Petrochemical Co. has been singled out in a report by the publisher of China's state-run newspaper for allegedly dodging taxes in a move that could prompt more government scrutiny of the so-called ‘teapot’ sector. The company allegedly passed off sales of gasoline and diesel as more lightly-taxed petrochemical products, so avoiding up to 13bn yuan ($2bn) in government levies, according to China Energy News, an industry journal managed by The People's Daily.
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Martin Shkreli's unique Wu Tang album sold by U.S. gov.
The U.S. government on Tuesday said it had sold a unique Wu-Tang Clan album previously owned by former pharmaceutical executive Martin Shkreli, who was convicted of securities fraud in 2017. Mr. Shkreli has said he paid $2m for the only existing copy of Once Upon A Time In Shaolin at an auction in 2015. The sale of the record, which is not for release to the public until 2103, will cover the balance of the $7.4m in forfeiture that a judge ordered Mr. Shkreli to pay at a 2018 sentencing where he was also given a seven-year prison term.
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