U.S. International Tax This Week for the Week Ending March 11

11 March 2016

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 11 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

In a letter to Senate Finance Committee Chairman Orrin Hatch (R-UT) dated 2 March, a Treasury official has written that the Obama Administration is reviewing Code Section 891 and its history "closely" in the context of the US government's concern over the ongoing EU state aid investigations. Section 891, which has never been invoked by any US President, allows for the doubling of the rate of tax of citizens and foreign corporations of foreign countries if the President determines that US citizens or corporations are being subject to discriminatory or extraterritorial taxes.

Both Administration and Congressional leaders have voiced their belief that the European Community is unfairly targeting US multinationals and requested that the EC reconsider its "sweeping interpretation" of the EU legal doctrine of state aid.

In corporate inversion developments, Treasury Secretary Jack Lew testified before Congress this week, saying that while administrative action has slowed the tide of corporate inversions, only legislation will end the practice of US companies moving overseas.

Meanwhile, Senate Finance Committee member Charles Schumer (D-NY) this week introduced the Corporate Inverters Earnings Stripping Reform Act of 2016, an anti-inversion bill that the senator first introduced in 2014. Senator Schumer's bill is complementary to another anti-inversion bill introduced by Finance Committee Member Sherrod Brown (D-OH) this week, The Pay What You Owe Before You Go Act. Senate Finance Committee Chairman Orrin Hatch (R-UT) reportedly does not support the bills.

In other news, Robert Stack, Treasury deputy assistant secretary (international tax affairs) said that while the United States supports country-by-country (CbC) reporting, it will cancel the sharing of such information with any country that publicly discloses the CbC data. The Treasury official also reiterated that the government is working to finalize the proposed CbC regulations by the end of June in order for the rules to apply to fiscal years beginning in the second half of 2016.

Stack's remarks reportedly came after Valere Moutarlier, director in charge of direct taxation for the European Commission's Directorate General for Taxation and Customs Union, publicly said at the same venue that the Commission is working on a proposal to release CbC information to the public, and that adoption of the proposal may take place as early as April. No details regarding the EC proposal are yet available.

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Tax Insights

Current status of legislation relating to US international tax rules (BNA)
This article, published in Tax Management International Journal, reports on significant bills introduced in the second session of the 114th Congress that would affect international provisions of the Internal Revenue Code.

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Upcoming Webcasts

2016 FATCA and CDOT reporting is here
2016 FATCA and CDOT reporting deadlines are approaching fast and many reporting financial institutions are beginning to re-start the process of preparing their data to submit to the relevant tax authority. Please join this Thought Center Webcast, to discuss: (i) the current global landscape; (ii) lessons learned from 2015; and (iii) key considerations for 2016.

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.

BorderCrossings ... With EY's transfer pricing and tax professionals
During this Thought Center Webcast, part of an ongoing monthly series, EY transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.

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Recent Tax Alerts

United States

— Mar 8: Update provided regarding further travel restrictions under US Visa Waiver Program (Tax Alert 2016-0462)

— Mar 7: FinCEN proposes revising FBAR rules (Tax Alert 2016-0455)

— Mar 7: OECD proposes changes to model tax convention regarding the treaty residence of pension funds (Tax Alert 2016-0460)

Africa

— Mar 10: South Africa's new reportable arrangement requires urgent action in relation to inbound services (Tax Alert 2016-0478)

— Mar 8: Angola establishes regime to report non-compliant taxpayers (Tax Alert 2016-0461)

— Mar 8: Ghana enacts income tax amendments related to interest payments and withholding taxes (Tax Alert 2016-0466)

— Mar 7: Kenya's online application for immigration services discussed (Tax Alert 2016-0454)

Asia

— Mar 10: Indian government withdraws budget proposals to tax Recognized Provident Fund contributions and withdrawals (Tax Alert 2016-0479)

— Mar 9: China expands scope of technologically advanced service company incentives (Tax Alert 2016-0471)

— Mar 8: Thailand issues harsher penalties for overstaying visas and notification required by businesses hosting foreign visitors (Tax Alert 2016-0464)

— Mar 4: India's Budget 2016 includes significant international tax proposals (Tax Alert 2016-0451)

Canada & Latin America

— Mar 8: Canada's Electronic Travel Authorization implementation date extended until fall 2016 (Tax Alert 2016-0463)

Europe

— Mar 9: Changes to process for obtaining a social security certificate of coverage in Italy discussed (Tax Alert 2016-0474)

— Mar 9: Dutch Supreme Court confirms legality of restrictions on the 30% facility (Tax Alert 2016-0475)

— Mar 9: Russian Duma passes Draft Law on taxation of electronic services in first reading (Tax Alert 2016-0473)

— Mar 8: Italy's new tax regime for inbound employees discussed (Tax Alert 2016-0465)

— Mar 4: Germany-Philippines revised income tax treaty enters into force (Tax Alert 2016-0452)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

2016-10

Internal Revenue Bulletin of March 7, 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: 2016-0485