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23 November 2016

U.S. International Tax This Week for the Week Ending November 25

Ernst & Young's U.S. International Tax This Week newsletter for the week ending November 25 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

Congressional Republican leaders are bullish on the prospects of enacting US tax reform in 2017 following the election of President-elect Donald Trump. Ways and Means Committee Chairman Kevin Brady (R-TX) was recently quoted as saying "tax reform is going to occur in 2017," although he said the timing has yet to be determined. The Chairman also offered that his tax team is continuing to write portions of the tax reform bill and working on transition rules based on the House Tax Reform Blueprint.

In regard to tax extenders, the Chairman repeated earlier statements that he does not want to act on tax extenders in the lame-duck session; rather the provisions should be dealt with in the context of tax reform. Senate Finance Committee Chairman Orrin Hatch (R-UT) echoed a similar sentiment, saying "I'm not a big fan of doing extenders."

The House and Senate are both out of session for the Thanksgiving Holiday this week, and will return to Washington the week of 28 November.

An innovative aspect of the House Tax Reform Blueprint is a provision for border adjustments. Under the proposal, border adjustments would exclude US exports from the tax base while including imports. This represents a major departure from the current US corporate income tax and would transform the consumption-based tax Blueprint plan to a destination-based tax on domestic consumption, significantly affecting exporters, importers, consumers and trade. An EY Tax Alert provides an overview of the Blueprint proposal and related policy considerations.

In other news, an IRS official this week said the government will soon release a package of FATCA withholding and reporting regulations. The official was quoted as saying the Service will issue final and temporary FATCA regulations that will address comments received with regard to 2014 temporary regulations. The final regulations reportedly will include provisions from various issued Notices, including "deferral of gross proceeds withholding, deferral of pass-through payment withholding and extension of limited foreign financial institution (FFI) status until the end of 2016," among other issues.

The official was also quoted as saying that proposed regulations will be issued in regard to other aspects of withholding and reporting, including certification and compliance requirements for sponsoring entities, IRS inquiries, and default events.

EY's Global TP practice this week released the first report in its 2016 Transfer Pricing Survey Series: In the spotlight — A new era of transparency and risk. The survey examines how transparency is driving change for transfer pricing professionals in 36 jurisdictions and 17 industries. It also provides insights into how companies are adapting and five recommendations for how to best operate in this new environment.

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Upcoming Webcasts

BEPS impact on the automotive industry
Now that the OECD has formally released 15 recommendations for reorganizing global tax laws, attention is turning to the governments that are putting them into practice. In order to understand the impact of BEPS, OEMs and suppliers will need to reassess their organizations from top to bottom, including where they work, business and operational models, supply chain networks and IT systems. During this Thought Center Webcast, Ernst & Young professionals will evaluate BEPS implications for automotive multinational businesses.

At a Crossroad: Tax Policy in the US and Abroad After the 2016 Elections
The recent US election results mean that US tax reform is a real possibility in 2017, which will likely have implications for trade, treaties, and global relations. Over the past few years, jurisdictions around the globe are converging around transparency and information sharing, with many taking steps to adopt the Organization for Co-Operation and Development's Base Erosion and Profit Shifting (OECD BEPS) recommendations. At the same time, many countries are adopting their own revenue-increasing measures, some of which diverge from the BEPS recommendations. During this Thought Center Webcast, Ernst & Young professionals will discuss how these elements are coming together to shape broader global tax policy — and what this shifting landscape may mean for companies.

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Recent Tax Alerts

Asia

Canada & Latin America

— Nov 21: Mexican 2017 Budget approved with tax package (Tax Alert 2016-1989)

Europe

— Nov 21: The latest on BEPS as of November 21 (Tax Alert 2016-1992)

— Nov 18: EY Hungary's Tax Newsletter for November 2016 (Tax Alert 2016-1979)

Middle East

Multinational

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2016-47Internal Revenue Bulletin of November 21, 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: 2016-2007

 

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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