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05 February 2016

U.S. International Tax This Week for the Week Ending February 5

Ernst & Young's U.S. International Tax This Week newsletter for the week ending February 5 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.

'One-click' access to EY Tax Alerts

Good news for subscribers: EY has implemented "one-click" access to EY Tax Alerts. As of February 1, when you receive e-mailed headlines to most EY Tax Alerts and related content, you will be able to click directly to the full text of each item, without the need for a login or password. This is one of several steps we are taking in the coming months to improve your user experience.

For the time being, you will still need your login to view the full archive of prior-year Alerts. However, we are working to ease your archival access also, so look for future announcements on this.

We welcome your comments on this change, and your suggestions for further improvements. For questions or comments, please contact Joan Osborne (joan.osborne@ey.com).

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Spotlight

Tax reform leadership in the House is coming together. House Speaker Paul Ryan (R-WI) this week announced that Ways and Means Committee Chairman Kevin Brady (R-TX) will lead a new tax reform task force in the House. The task force is one of six committee-led groups being established to develop a pro-growth agenda.

In turn, Ways and Means Committee Chairman Brady reportedly is tapping Tax Policy Subcommittee Chairman Charles Boustany (R-LA) to draft an international tax reform bill. Chairman Boustany was quoted as saying he was targeting to complete an international tax discussion draft before the Republican National Convention in July. That draft, Chairman Boustany said, will include a so-called innovation box proposal.

Chairman Brady was also quoted as saying that his committee would focus on drafting legislation to address corporate inversions and repatriation, with a House vote on such legislation possible this year, depending on the level of support.

Rising concerns in the United States over EU State aid investigations have sent a senior Treasury official to Brussels to discuss the situation. Robert Stack, Treasury deputy assistant secretary (international tax affairs) reportedly met with EU officials in late January to deliver the message that the US government views the investigations as unfairly targeting US multinationals. The news follows a recent letter sent by Finance Committee Chairman Orrin Hatch (R-UT), Ranking Member Ron Wyden (D-OR) and Committee members Rob Portman (R-OH) and Chuck Schumer (D-NY) to Treasury Secretary Jack Lew expressing their "strong concerns" about the ongoing EU investigations targeting American companies.

In major news, the IRS has issued final and temporary (TD 9748), as well as proposed (REG-100861-15), regulations providing guidance on the allocation by a partnership of creditable foreign tax expenditures under Section 704. The regulations revise and clarify the operation of an existing safe harbor used to determine whether allocations of creditable foreign tax expenditures are deemed to be in accordance with the partners' interests in the partnership. Generally, subject to certain special rules, the temporary regulations are effective for partnership tax years that begin on or after 1 January 2016, and end on or after the date the regulations are published in the Federal Register. A Tax Alert on the regulations is forthcoming. An ITS Alert is pending.

A Treasury official recently indicated that the final, newly updated US Model Tax Treaty will be released "very soon." The official also confirmed earlier reports that the US is participating in the development of the OECD multilateral instrument. But the official said there will be no decision on whether the US signs on until the final package is complete.

Treasury also announced that the US government will begin accepting bilateral advance pricing agreement (APA) applications with India beginning 16 February. The two countries halted transfer pricing dispute resolution action in 2013.

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Upcoming Webcasts

International tax talk quarterly series with EY's Global Tax Desk Network: Business activities abroad in a changing transfer pricing landscape
During this Thought Center Webcast, Ernst & Young professionals will discuss the hot transfer pricing topics that may affect your international business activities, with a specific focus on Europe and India.

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Recent Tax Alerts

United States

Asia

— Feb 4: Hong Kong and Russia sign income tax treaty (Tax Alert 2016-0247)

Canada & Latin America

— Feb 4: Uruguay enacts budget for 2015-2019 (Tax Alert 2016-0249)

— Feb 4: EY Canada's Tax Matters @ EY for February 2016 (Tax Alert 2016-0245)

— Feb 3: New Brunswick budget 2016-17 discussed (Tax Alert 2016-0233)

Europe

— Feb 1: The latest on BEPS as of February 1 (Tax Alert 2016-0223)

Middle East

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Recent Newsletters

Washington Dispatch
Highlights of this edition include:

Legislation

— Ways and Means to mark-up international tax reform bill in 2016
— US legislation has implications for certain foreign pension funds and FIRPTA
— Senate Finance Committee leaders voice concerns to Treasury over EU state aid investigations

IRS news

— US government issues guidance offering RICs with Section 853 elections alternative methods for handling foreign tax refunds

Courts

— Sixth Circuit holds foreign currency option is Section 1256 contract, reverses Tax Court

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-05Internal Revenue Bulletin of February 1, 2016
 2016-06Internal Revenue Bulletin of February 8, 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: 2016-0254

 

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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