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25 March 2016

U.S. International Tax This Week for the Week Ending March 25

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 25 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 is now looking at base erosion issues in crafting an international tax reform draft, according to W&MTax Policy Subcommittee Chairman Charles Boustany (R-LA). It is not clear when the international draft, originally slated for release at the end of March, will become publicly available. Chairman Boustany was quoted as saying the international draft will include a new innovation box proposal that will differ from the one he introduced last summer with Ways and Means Committee Member Richard Neal (D-MA).

Ways and Means Committee Chairman Kevin Brady (R-TX) this week also said that while a corporate tax rate reduction is key to US international tax reform, it would be addressed in the context of comprehensive tax reform. Adding a timeline, a Ways and Means Committee aide this week was quoted as saying he believes both House Speaker Paul Ryan (R-WI) and Ways and Means Chairman Brady are looking at 2017 as the window of opportunity to pass US tax reform, with the rest of this year being used to review various proposals. There reportedly is also renewed attention being given in the Committee to former Ways and Means Committee Chairman Dave Camp's 2014 tax reform draft, the Tax Reform Act of 2014.

Toward the goal of comprehensive reform, the Ways and Means Tax Policy Subcommittee on 22 March held the first in a series of hearings to address tax reform proposals by members of Congress. This week's hearing focused on cash-flow and consumption-based approaches to taxation. A WCEY Tax Alert provides details.

The IRS released final outbound asset reorganization regulations (TD 9760) under Sections 367, 1248 and 6038B that generally adopt the provisions of the temporary and proposed regulations issued in 2013 without substantive change, including the elimination of the section 367(a)(5) exception. The temporary regulations were set to expire on 18 March.

The take-away is that the 2016 final regulations, which are effective 22 March, do not change the current tax consequences under Sections 367 and 1248 with regard to outbound asset reorganizations. An ITS Alert provides details.

On the BEPS front, the OECD on 24 March issued a consultation document under Action 6, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances. The consultation document represents follow up work on issues related to the treaty entitlement of non-CIV funds to ensure that the new treaty provisions included in the Report on Action 6 adequately address the treaty entitlement of these funds. Comments are requested by 22 April 2016. An ITS Alert is pending.

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EY Guides, Surveys, and Reports

Global Tax Policy and Controversy Briefing for March 2016
This quarterly publication summarizes recent developments and news pertinent to multinational companies. Highlights of this special edition include BEPS final recommendations.

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Upcoming Webcasts

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.

Mexico indirect taxes
During this Thought Center Webcast, a panel of Mexico indirect tax professionals will discuss potential tax risks in your Mexican operations and identify possible opportunities to save cash flow or reduce costs through strategic planning and proactive engagement.

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Recent Tax Alerts

United States

Africa

Asia

Canada & Latin America

— Mar 25: Brazil increases tax rates on capital gains (Tax Alert 2016-0558)

— Mar 24: Brazil increases tax rates on capital gains (Tax Alert 2016-0558)

— Mar 22: Canada's federal budget 2016-17 discussed (Tax Alert 2016-0546)

Europe

Middle East

Oceania

Multinational

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-12Internal Revenue Bulletin of March 21, 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: 2016-0564

 

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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