One minute with Ed Denny, head of the London tax department at Orrick, Herrington & Sutcliffe.
What’s keeping you busy at work?
Orrick has a global focus on the technology, energy and infrastructure and finance sectors, and my workload is generally representative of that. Currently I am advising on a cross-border refinancing of a renewable energy portfolio, advising a UK tech company looking to enter the US market through a strategic acquisition and helping a number of other UK tech companies raise money in the US. I am also advising a client on tax information exchange. I enjoy the breadth of work I do, and the opportunity to work on international tax matters with colleagues.
If you could make one change to a tax law or practice, what would it be?
It is always great if tax can play a role in a changing behaviour as part of a coordinated strategy for the common good. I would be supportive, for example, of tax measures that can help reduce plastic waste.
What caught your eye in the 2017 Autumn Budget?
Like many, I found the government’s position paper on corporate tax and the digital economy very interesting. This is partly because some of the concepts proposed are novel and unexpected. Some are also a bit alarming (such as the proposed interim solution of taxing revenue with a UK nexus). However, I am interested to note that the UK is trying to influence the longer term direction by proposing that states should be able to tax profits that have been derived from an active user base within its territory. This would not require a permanent establishment, and the suggestion is that profits should be allocated on a formulaic basis and depart from the arm’s length principle. This departs from traditional views, and is not what many would have expected.
What should we look out for in 2018?
US tax reform. It is shocking to see the complexity of the proposals, as the legislation was hurried through Congress without some of the vetting that would normally take place. Much of 2018 will involve developing an understanding of this, and it is going to be fascinating to see what effect this far-reaching reform will have.
My current thoughts are that the move towards a territorial system with a new participation exemption, together with the deemed repatriation tax, should reduce the incentives for US-based multinationals to keep cash offshore. It may be surprising how much pressure there is to repatriate cash from outside the US and to deploy it quickly.
Leverage placement will also need to be reconsidered. Leverage in the US is likely to be disfavoured, and may be pushed down to affiliates. The new foreign tax credit rules will create much more pressure on reducing foreign taxes.
We may also see the US compete more as a preferred location for holding companies with other jurisdictions, although the playing field has not been completely levelled from a tax perspective.
US-based multinationals may also look at their IP. It seems unlikely there would be significant movement of IP back to the US, but many companies will still go through the analysis.
You might not know this about me…
My family adopt greyhounds. Typically these are dogs that have been abandoned once they are considered no longer useful as racing dogs. Greyhounds are easy-going and really, really lazy – which appeals to me.
One minute with Ed Denny, head of the London tax department at Orrick, Herrington & Sutcliffe.
What’s keeping you busy at work?
Orrick has a global focus on the technology, energy and infrastructure and finance sectors, and my workload is generally representative of that. Currently I am advising on a cross-border refinancing of a renewable energy portfolio, advising a UK tech company looking to enter the US market through a strategic acquisition and helping a number of other UK tech companies raise money in the US. I am also advising a client on tax information exchange. I enjoy the breadth of work I do, and the opportunity to work on international tax matters with colleagues.
If you could make one change to a tax law or practice, what would it be?
It is always great if tax can play a role in a changing behaviour as part of a coordinated strategy for the common good. I would be supportive, for example, of tax measures that can help reduce plastic waste.
What caught your eye in the 2017 Autumn Budget?
Like many, I found the government’s position paper on corporate tax and the digital economy very interesting. This is partly because some of the concepts proposed are novel and unexpected. Some are also a bit alarming (such as the proposed interim solution of taxing revenue with a UK nexus). However, I am interested to note that the UK is trying to influence the longer term direction by proposing that states should be able to tax profits that have been derived from an active user base within its territory. This would not require a permanent establishment, and the suggestion is that profits should be allocated on a formulaic basis and depart from the arm’s length principle. This departs from traditional views, and is not what many would have expected.
What should we look out for in 2018?
US tax reform. It is shocking to see the complexity of the proposals, as the legislation was hurried through Congress without some of the vetting that would normally take place. Much of 2018 will involve developing an understanding of this, and it is going to be fascinating to see what effect this far-reaching reform will have.
My current thoughts are that the move towards a territorial system with a new participation exemption, together with the deemed repatriation tax, should reduce the incentives for US-based multinationals to keep cash offshore. It may be surprising how much pressure there is to repatriate cash from outside the US and to deploy it quickly.
Leverage placement will also need to be reconsidered. Leverage in the US is likely to be disfavoured, and may be pushed down to affiliates. The new foreign tax credit rules will create much more pressure on reducing foreign taxes.
We may also see the US compete more as a preferred location for holding companies with other jurisdictions, although the playing field has not been completely levelled from a tax perspective.
US-based multinationals may also look at their IP. It seems unlikely there would be significant movement of IP back to the US, but many companies will still go through the analysis.
You might not know this about me…
My family adopt greyhounds. Typically these are dogs that have been abandoned once they are considered no longer useful as racing dogs. Greyhounds are easy-going and really, really lazy – which appeals to me.
