09 September 2016 U.S. International Tax This Week for the Week Ending September 9 Ernst & Young's U.S. International Tax This Week newsletter for the week ending September 9 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. —————————————————————————
Spotlight Congress ended its seven-week summer recess on 6 September when it convened a pre-election session. The House is expected to be in Washington through September with the Senate slated to be in session through the first week of October before breaking until after the 8 November elections. The short timeframe and pre-election environment make passing legislation other than government spending unlikely, although discussion of the House Republican tax reform Blueprint as well as various tax bills at the committee level is probable. A Congressional lame-duck session after the elections is expected, at which point Congress may consider other 2016 tax extenders and a tax technical corrections package. (Identical technical corrections bills were introduced last April (H.R. 4891, S. 2775.) Tax reform will not occur until a new president and Congress are in power in 2017, although work will continue on tax issues through the remainder of 2016. House Ways and Means Committee Chairman Kevin Brady (R-TX) earlier in the summer suggested that the Committee may consider Member tax proposals that are separate from tax reform. An in-depth WCEY Alert provides an overview of what to expect in Congress in the fall. Meanwhile, Senate Finance Committee Chairman Orrin Hatch (R-UT) was quoted this week as saying his long-awaited corporate integration proposal is almost finished, although he declined to say when it would be released to the public. The Chairman has touted his corporate integration plan as an alternative to Treasury's proposed Section 385 debt/equity regulations. On the Administration side, Treasury has consistently indicated it plans to move "swiftly" to finalize the proposed Section 385 regulations. Treasury officials, including Secretary Jack Lew, met with members and staff prior to the summer recess, and the tax press is reporting another meeting is scheduled with Ways and Means Committee members on 14 September. Both House Ways & Means Committee Chairman Brady and Senate Finance Committee Chairman Hatch have mulled the idea of holding hearings on the proposed regulations, although none are scheduled at this time. Treasury officials, in meetings on Capitol Hill as well as in private sessions with industry groups and individual companies, have committed to making changes in a number of areas as the Administration moves to finalize the Section 385 rules. It remains unclear, however, how Treasury might modify the final regulations. The areas where changes are at least possible, include: — Cash pooling arrangements
— Potential exemptions or carve outs for financial services industry groups
— Payments among foreign subsidiaries of US companies
— Treatment of S corporations
— Treatment of REITs
— Revisions to the documentation requirements
— Revisions to the "per se" recharacterization rule
— Modifications to effective dates Earlier suggestions that the government would finalize the Section 385 proposed regulations around Labor Day have been pushed aside; final regulations may not be issued until later in the fall. In other news, the IRS this week released Revenue Procedure 2016-46, providing the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under Section 842(b). Rev. Proc 2016-46 is effective for tax years beginning after 31 December 2014. |
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Tax Insights —————————————————————————
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. —————————————————————————
Recent Tax Alerts —————————————————————————
Recent Newsletters — Congressional Republicans maintain opposition to Proposed Section 385 regulations — IRS is focusing on FATCA Intergovernmental Agreements currently 'in effect'
— Obama Administration issues White Paper on EU State aid investigations
— Final regulations issued on 2% tax on payments US government makes to foreign persons under certain contracts
— Treasury/IRS 2016-2017 Priority Guidance Plan contains several new international tax projects
— US hyperinflationary list for 2015 available — Lawsuit filed challenging anticorporate inversion regulations — OECD releases Discussion Draft on branch mismatch structures —————————————————————————
IRS Weekly Wrap-Up Internal Revenue Bulletin | | 2016-36 | Internal Revenue Bulletin of September 6, 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: 2016-1518 | 
