U.S. International Tax This Week for the Week Ending September 2

01 September 2016

Ernst & Young's U.S. International Tax This Week newsletter for the week ending September 2 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

On 30 August, the European Commission released its decision in an investigation into the (alleged) State aid issues associated with a multinational company's tax arrangements agreed with the Irish Government. The Commission concluded that two tax rulings issued by Ireland have substantially and artificially lowered the tax paid by the multinational in Ireland since 1991.

The Commission ordered that Ireland must now recover the unpaid taxes in Ireland from the multinational for the years 2003 to 2014 of up to €13 billion, plus interest. The Irish Government has confirmed it will seek Cabinet approval to appeal the decision as it disagrees profoundly with the Commission's decision. A press release issued by the Irish Department of Finance confirms that "Ireland's position remains that the full amount of tax was paid in this case and no State aid was provided." The multinational has also said that it will appeal the decision.

A Canadian official this week was quoted as saying that Revenue Canada and the IRS are having informal discussions on the subject of joint audits. The official noted that the two agencies held a joint audit in 2013 under the OECD's Joint International Taskforce on Shared Intelligence and Collaboration. The official said Revenue Canada has floated the idea of taking a "bucket" approach whereby the two sides would focus on groups of cases involving recurring issues affecting multiple taxpayers.

Congress returns from the August recess on 6 September, with both the House and Senate in session.

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EY Guides, Surveys, and Reports

EY article discusses final US country-by-country reporting regulations
Recently released final US country-by-country (CbC) reporting regulations mean that, for the first time, many US-based multinational enterprises will soon have to provide tax authorities with a breakdown of their allocation of profits on a global basis, the amount of taxes paid on those profits and certain other economic indicators. A short article from the EY Center for Tax Policy, in Q&A format, offers an overview of the key elements of the CbC regulations, including who must file reports, what must be reported and when the new requirements begin.

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Tax Insights

Proposed Section 385 Regulations go way too far (BNA)
This article, published in Tax Management International Journal, discusses the extensive and very complex proposed regulations under Section 385 issued on April 4.

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Upcoming Webcasts

International tax talk
During this Thought Center Webcast, part of an ongoing series, a panel of experienced EY professionals will provide you with information on major tax law changes in the countries and jurisdictions covered by our US-based Global Tax Desk Network.

Brexit: Implications for the automotive sector
During this Thought Center Webcast, Ernst & Young professionals discuss possible implications for the automotive & transportation sector from compliance, tax, global trade, operations, supply chain and capital agenda perspectives.

BEPS impact on the Real Estate Fund industry
During this Thought Center Webcast, Ernst & Young professionals will discuss the BEPS developments that will impact the Real Estate Fund industry.

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Recent Tax Alerts

United States

— Aug 26: US Tax Court case that disallowed foreign tax credit for French CSG and CRDS social taxes is reversed and sent back to Tax Court for reconsideration (Tax Alert 2016-1462)

Asia

— Aug 29: China announces several updates to residence permit requirements (Tax Alert 2016-1467)

— Aug 29: Philippines releases draft automatic treaty rates application procedures for dividend, interest and royalty payments to nonresidents (Tax Alert 2016-1464)

— Aug 26: Hong Kong-Russia income tax treaty enters into force (Tax Alert 2016-1456)

Canada & Latin America

— Aug 31: Costa Rica-Germany Double Taxation Treaty is now in force (Tax Alert 2016-1479)

— Aug 25: Peruvian Tax Authority requires resident trustees to report foreign trust information (Tax Alert 2016-1453)

Europe

— Sep 1: Hungary/United States social security agreement comes in to force September 1 (Tax Alert 2016-1485)

— Sep 1: Danish Government proposes tax cuts (Tax Alert 2016-1481)

— Sep 1: European Commission finds Ireland granted illegal State aid and orders recovery (Tax Alert 2016-1482)

— Aug 30: The latest on BEPS as of August 29 (Tax Alert 2016-1470)

— Aug 29: Italy amends white list (Tax Alert 2016-1465)

— Aug 29: Portugal approves tax treaties with Ivory Coast and Sao Tomé and Principe (Tax Alert 2016-1466)

— Aug 26: Ireland launches consultation on double tax treaty with US (Tax Alert 2016-1455)

Multinational

— Aug 26: OECD releases discussion draft on branch mismatch structures (Tax Alert 2016-1458)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

2016-35

Internal Revenue Bulletin of August 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: 2016-1483