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23 September 2016

U.S. International Tax This Week for the Week Ending September 23

Ernst & Young's U.S. International Tax This Week newsletter for the week ending September 23 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 EU State aid investigations of US multinationals dominated international tax this week. The European Commission's competition commissioner, Margrethe Vestager, came to Washington to defend the Commission's controversial investigations, as well as the most recent allegation of illegal state aid made against a US multinational, this time to the tune of EUR 13 billion. Her visit followed a letter last week by the US Business Roundtable to European heads of state asking for reconsideration of the most recent State aid ruling.

Following a meeting between the EU official and House Ways and Means Committee Chairman Kevin Brady (R-TX), the chairman issued a statement saying that in "applying these decisions retroactively, the Commission is pursuing a completely irresponsible and far-reaching tax policy agenda that will strain U.S.- EU relations." Chairman Brady acknowledged, however, that Congress has "limited legislative options for stopping the Commission from continuing down this misguided path." He noted that the Commission's actions provide further impetus to enact US tax reform in 2017.

Robert Stack, Treasury deputy assistant secretary (international tax affairs) also weighed-in on the EU State Aid investigations on 19 September, saying Treasury stands by its recent White Paper in which it argued that the European Commission is applying a new interpretation of State aid rules as well as a new version of the arm's-length standard. The Treasury official reiterated the Obama Administration's position that the retroactive aspect of the recent state aid cases is inappropriate and state aid is not the proper vehicle for international tax reform.

In other news, House Speaker Paul Ryan (R-WI) was quoted this week as saying that US tax reform is "probably the easiest get" in terms of major legislation being enacted by Congress in 2017. Ways and Means Chairman Brady also said this week that US multinationals have responded favorably to the House tax reform blueprint that was released this past June.

Finally, a senior IRS official this week said that the Service is soon expecting a "tsunami" of mutual agreement procedure (MAP) cases. The official was quoted as saying that BEPS Action 14 (make dispute resolution mechanisms more effective) will have a positive impact on the process, but also an increase in the number of cases that will not be matched by an increase in IRS resources. A MAP peer review process under Action 14 is also under development by the OECD's Working Party 1 and the Forum on Tax Administration.

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Upcoming Webcasts

India: Implementing the new goods and services tax (GST) regime
The coming implementation of India's new GST regime on April 1, 2017, will require businesses operating in India, as well as overseas businesses liaising with their Indian counterparts, to overhaul their entire indirect tax processes. During this Thought Center Webcast, Ernst & Young professionals will discuss the GST implementation and next steps in detail..

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.

International Tax Services . . . With EY tax professionals: What recent tax developments could mean for your Mexican operations
Recent tax developments in Mexico could result in issues with long-standing service company arrangements and unexpected assessments, if businesses are not prepared. During this Thought Center Webcast, Ernst & Young professionals will examine these latest developments and offer insights on what they could mean for your Mexican service company and overall business operations. We hope you will be able to join us.

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Recent Tax Alerts

United States

Africa

Canada & Latin America

Europe

— Sep 22: EY Slovakia's Tax News for August 2016 (Tax Alert 2016-1602)

— Sep 21: Dutch Government publishes 2017 Budget Proposal (Tax Alert 2016-1586)

Oceania

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-38Internal Revenue Bulletin of September 19, 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: 2016-1610

 

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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