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Spotlight

The IRS held a packed public hearing on the controversial Proposed Section 385 regulations on 14 July, but if participants expected the government to respond to their concerns they were likely disappointed. Witnesses told the Treasury and IRS panel of the many problems associated with the proposed regulations package, but were generally met with no comment. The government panel also did not provide any insight as to when it expects to finalize the proposed regulations, however we have heard informally that the government anticipates releasing the final regulations in early fall.

Meanwhile, House Ways and Means Committee Chairman Kevin Brady (R-TX) said last week he has asked for a meeting with Treasury Secretary Jacob Lew to discuss the proposed regulations. Chairman Brady has made clear he opposes the proposed regulations in their current form.

On the Senate side, Finance Committee Chairman Orrin Hatch (R-UT) this week indicated his corporate integration proposal will not be released before the 7-week Congressional recess which begins next week; both the House and Senate have left Washington and will return only after Labor Day. Chairman Hatch was quoted as saying the draft proposal is still under analysis by the Joint Committee on Taxation and will likely be released later this summer.

The OECD reportedly plans to present certain objective criteria to identify uncooperative jurisdictions to G-20 Finance Ministers at their upcoming meeting in Chengdu, China on 22-23 July. Such criteria would be used to identify jurisdictions that fail to comply with tax transparency standards. Reportedly, the first list of uncooperative jurisdictions would be released in 2017, to give those jurisdictions time to amend their deficiencies.

Speaking on the OECD's second Tax Talks webcast series, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, said the current draft text of the multilateral instrument will be amended based on comments received and will then be submitted for another round of negotiations in September. The hope is for the text to be approved no later than November and opened for signature by the end of 2016.

Coming up, OECD officials indicated that a discussion draft on interest deductions in the banking and insurance sectors will be released on 28 July. A discussion draft on branch mismatch arrangements is scheduled for release the week of 8 August. A public consultation on both the attribution of permanent establishments and revised guidance on profits splits is expected in mid-October.

And, in an exclusive interview filmed for EY's aHead of Tax flagship event held in Barcelona in mid-June, Pascal Saint-Amans laid out a new direction for the OECD's tax initiatives.