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15 January 2016

U.S. International Tax This Week for the Week Ending January 15

Ernst & Young's U.S. International Tax This Week newsletter for the week ending January 15 is now available. Prepared by Ernst & Young's International Tax Services group, this weekly update summarizes important news, cases, and other developments in international taxation.

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Spotlight

The House Ways and Means Committee will mark-up an international tax reform bill in 2016, according to committee Chairman Kevin Brady (R-TX). The chairman was quoted as saying this week that the international proposal will build on prior work done by former Ways and Means Committee Chairmen Dave Camp and now-Speaker Paul Ryan (R-WI). Many in Congress remain skeptical that an international tax reform bill can be passed by Congress during a presidential election year, although Chairman Brady is optimistic that there is enough bipartisan support in Congress for reforming the US international tax rules.

Chairman Brady also said his committee would focus on corporate inversions and repatriation of corporate earnings this year, with hearings on both topics. The Chairman was further quoted as saying this week that he would work with Senate Finance Committee Chairman Orrin Hatch (R-UT) to develop international-related legislation beginning the week of 18 January.

President Obama came to Congress on 12 January to deliver his last State of the Union address. The President took the podium to deliver a spirited defense of the past seven years of his Administration, eschewing the usual laundry list of legislative proposals typical in a State of the Union address. The President's lack of specifics — including in the area of taxation — was at least in part due to the reality that it will be difficult to enact bipartisan legislation during the President's last year in office and in an election year.

In other news, a Treasury official was quoted in the tax press as saying the government is considering including a foreign goodwill exception in the final Section 367 regulations. The government released proposed regulations in September 2015 that would subject outbound transfers of foreign goodwill or going concern value to tax under Section 367(a) or (d). According to the Treasury official, the possible safe harbor would address a multinational's routine return on intangibles and that it could be based on broad market benchmarks. Getting those benchmarks may be problematic, the official indicated, adding that the government is interested in hearing ideas about retaining an acceptable foreign goodwill exception.

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Tax Insights

Proposed and temporary regulations under Section 956 discussed (BNA)
This article, published in Tax Management International Journal, reports on the proposed and temporary regulations under Section 956, which expand (and propose to further expand) the instances requiring an income inclusion under Section 951(a)(1)(B) as a result of a CFC's holding US property.

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Upcoming Webcasts

Americas Tax legislative update: Recent trends and outlook for 2016
Tax reform, leadership shifts and BEPS-driven legislative changes are happening throughout the Americas, adding complexity to an already challenging tax environment. During this Thought Center Webcast, Ernst & Young professionals will discuss these and other topics of interest, including: (i) What the recent elections and tax changes across Latin America and Canada could mean for multinationals; (ii) The US tax legislative outlook; and (iii) How the shift toward digitization will affect your tax operations.

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Recent Tax Alerts

United States

Africa

Asia

Canada & Latin America

Europe

— Jan 15: Italy's Budget Law 2016 amends VAT rules (Tax Alert 2016-0112)

— Jan 12: Russian Tax Brief for December 2015 (Tax Alert 2016-0067)

— Jan 12: Luxembourg Parliament approves 2016 tax measures (Tax Alert 2016-0069)

Middle East

Oceania

Multinational

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Recent Newsletters

Washington Dispatch
Highlights of this edition include:

— Legislation
— Foreign tax credit
— Subpart F
— Sourcing
— Corporate
— Reorganizations
— Partnerships
— Withholding
— Foreign Account Tax Compliance (FATCA)
— Passive Foreign Investment Companies (PFIC)
— Transfer pricing
— Capital markets
— Tax treaties
— Miscellaneous
— OECD

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-02Internal Revenue Bulletin of January 11, 2016

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Additional Resources

Ernst & Young Client Portal, the leading source for news, analysis, and reference materials for corporate tax professionals, has a variety of content of interest to international tax practitioners, including:

— International Tax Online Reference Service. Key information about, and important tax developments from, 56 foreign jurisdictions, including information on tax rates, interest rates and penalties, withholding, and filing dates.

— EY/Passport. EY/Passport is your guide to planning ventures in the global economy, offering a wealth of tax and business knowledge on more than 150 countries.

Because the matters covered herein are complicated, U.S. International Tax This Week should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.

Document ID: 2016-0104

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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