06 May 2016 U.S. International Tax This Week for the Week Ending May 6 Ernst & Young's U.S. International Tax This Week newsletter for the week ending May 6 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. —————————————————————————
SpotlightUS multinationals need to become more involved in the global international tax debate in order to combat the general perception that corporations do not pay their full share of tax, profit shifting is rampant, and therefore action is needed to rein it in, according to Robert Stack, Deputy Assistant Secretary (International Tax Affairs). In a speech to a Washington Think Tank on 3 May, Stack argued that this overall perception has resulted in an unstable global tax environment. He said that unless US international tax reform takes a major step toward restoring stability, countries will continue to take unilateral and targeted action based on the belief that companies are engaged in tax arbitrage and tax planning. The Treasury official also called for a more data driven discussion of US international tax issues, and not simply whether the US should join the "race to the bottom." Stack said there needs to be a realistic discussion of the fiscal ramifications of proposals for US business tax reform that would produce less government revenue. The IRS issued proposed regulations today (5 May) that would amend Section 301.7701-2(c) to treata domestic disregarded entity that is wholly owned by a foreign person as a domestic corporation separate from its owner for the limited purposes of reporting and record maintenance under Section 6038A. The proposed regulations would not amend the framework of the existing entity classification regulations, including the treatment of certain disregarded entities. Instead, the purpose of the proposed regulations is to provide the IRS with improved access to information to satisfy its obligations under US tax treaties, tax information exchange agreements and similar international agreements. The proposed regulations would be applicable for tax years ending on or after the date that is 12 months after the date these regulations are published as final regulations. Treasury and IRS officials are beginning to offer their insights regarding the proposed Section 385 regulations issued last month. A Treasury official was quoted as saying this week that the government is looking for comments in regard to cash pooling arrangements. Specifically, the government is seeking insights into how to distinguish between cash pooling arrangements that provide short-term liquidity, as opposed to an arrangement that is more akin to a loan. The challenge to the government, an official said, is determining those true exceptions to the per se rule in Proposed Reg. Section 1.385-3. |
—————————————————————————
Tax Insights Intangible BEPS Risks (BNA)
This article, published in Tax Management International Journal, discusses the OECD BEPS report on Actions 8-10, specifically on the aspects of that report dealing with risk and intangible property (IP). —————————————————————————
Recent Tax Alerts —————————————————————————
Recent Newsletters Washington Dispatch
Highlights of this edition include: — Uncertainty regarding international tax reform draft; House comprehensive tax reform blueprint to be released end of June — New US Section 385 regulations would treat certain related-party corporate interests as stock, rather than debt, for federal tax purposes
— US Treasury issues new regulations modifying application of Section 7874 to inversion transactions and limiting US tax benefits of post-inversion planning
— US working toward allowing optional CbC reporting, seeks more multinational involvement
— Proposed regulations address Section 305(c) deemed distributions and related withholding
— Proposed regulations will treat foreign-owned single-member LLCs as corporations solely for Section 6038A reporting purposes
— IRS updates list of countries for automatic exchange of information on bank interest paid to NR aliens
— New IRS Associate Chief Counsel (international) lists top guidance priorities —————————————————————————
IRS Weekly Wrap-Up Internal Revenue Bulletin | | 2016-18 | Internal Revenue Bulletin of May 2, 2016 |
—————————————————————————
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: 2016-0820 | 
