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04 March 2016

U.S. International Tax This Week for the Week Ending March 4

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 4 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

Treasury is on track to release final country-by-country (CbC) reporting regulations by 30 June, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs). The official was quoted this week as saying this would require US multinationals to file their CbC report for all tax years beginning after that date, i.e., 1 July 2016 and going forward.

The OECD in BEPS Action 13 (transfer pricing documentation) recommended that CbC reporting be effective on 1 January 2016, and a number of countries have followed suit, making their CbC requirements effective from that date. This has created a potential issue for many US companies that effectively will have a "gap" when they may be required to provide country-by-country reporting for some countries, but not for the IRS.

In other news, the EU's Competition Commissioner has responded to Treasury Secretary Jacob Lew's letter to the President of the European Commissioner earlier this month, in which the Secretary discussed growing US concern over the ongoing EU State aid investigations. Secretary Lew suggested that the European Community was unfairly targeting US multinationals. The EU official responded by denying that the EU is disproportionately targeting US companies in its state aid probe and said its investigations are entirely within the parameters of EU law.

House Ways and Means Committee Chairman Kevin Brady (R-TX) on 2 March released a mission statement and broad policy goals for the Task Force on Tax Reform that he chairs. The Task Force was announced by Republican leaders earlier this year as one of the focus areas for the development of a pro-growth agenda to present to the nation. The plan is to produce a House Republican blueprint for comprehensive tax reform, while separately developing an international tax reform proposal.

On the Senate side, Finance Committee Chairman Orrin Hatch (R-UT) this week said that his corporate tax integration plan may not be released until May of this year. The Chairman, who earlier indicated a draft plan could be released as early as February or March, reportedly made his remarks after meeting with the Congressional Joint Committee on Taxation.

The IRS this week addressed the diplomatic thaw in relations between the US and Cuba, issuing Revenue Ruling 2016-8. The ruling modifies Rev. Ruling 2005-3 by removing Cuba from the list of countries for which foreign tax credits and CFC deferral are disallowed under the special rules of Section 901(j) and 952(a)(5), respectively.

And finally, the Service has issued Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for use in 2016. The publication describes the persons responsible for withholding (withholding agents), the types of income subject to withholding, and the information return and tax return filing obligations of withholding agents. It also reviews the rules that apply generally to payments of US source income to foreign persons, dispositions of US real property interests and withholding by partnerships on income effectively connected with the active conduct of a US trade or business.

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Upcoming Webcasts

Global trade management: Making sense of a world in motion
During this Thought Center Webcast, Ernst & Young professionals will discuss the following key topics: (i) Managing operations and duty costs related to changing trade flows and fragmented supply chains; (ii) Digital future and distribution channels; (iii) Managing policy and controversy; (iv) Data access, transparency and analytics trends; and (v) Service delivery models of leading global trade practices.

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Recent Tax Alerts

Africa

— Mar 1: Namibia issues 2016/17 Budget (Tax Alert 2016-0414)

Asia

— Feb 29: Hong Kong 2016/17 budget proposal discussed (Tax Alert 2016-0402)

Canada & Latin America

— Mar 3: EY Canada's Tax Matters @ EY for March 2016 (Tax Alert 2016-0437)

— Feb 29: Ontario and Nunavut budgets for 2016-17 discussed (Tax Alert 2016-0401)

Europe

— Mar 3: Russian Tax Brief for February 2016 (Tax Alert 2016-0434)

— Mar 1: The latest on BEPS as of February 29 (Tax Alert 2016-0411)

Middle East

Oceania

Multinational

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Recent Newsletters

ITS/Washington Dispatch
Highlights of this edition include:

Legislation

— US international tax reform takes on urgency in Congress
— Obama Administration's FY 2017 budget includes international tax provisions substantially similar to 2016 proposals

Treasury and IRS news

— Treasury releases 2016 US Model Treaty with new provisions to combat base erosion and profit shifting
— IRS amends regulations allocating partnership foreign tax expense
— FIRPTA regulations amended to reflect PATH Act
— IRS files appeal in Altera Corp case

OECD BEPS news

— OECD proposes framework to broaden country participation in BEPS
— Dutch EU Presidency sets out EU-BEPS Roadmap

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-09Internal Revenue Bulletin of February 29, 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: 2016-0443

 

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