U.S. International Tax This Week for the Week Ending January 6

06 January 2017

Ernst & Young's U.S. International Tax This Week newsletter for the week ending January 6 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 115th Congress convened on 3 January 2017, setting the stage for Republican control of both the House and Senate as well as the White House. President-elect Trump and House Republican leaders have indicated that tax reform and repeal of the Affordable Care Act will top the agenda for the new government. The starting point for the reform effort in the House is expected to be the House Republican Blueprint for Tax Reform.

President-elect Trump's team earlier had floated the idea of a tariff on imports as high as 10%. House Speaker Paul Ryan (R-WI) this week steered clear of the idea of imposing higher tariffs. In a radio interview this week, the Speaker was quoted as saying that tax reform — and not raising tariffs — was the key to addressing the current US trade imbalance. Recall however, that the Blueprint would potentially result in the taxation of imports.

In IRS news, the Service released extensive FATCA-related guidance on 30 December. The IRS issued final regulations (T.D. 9808 and T.D. 9809) under the Foreign Account Tax Compliance Act (FATCA, also known as "Chapter 4"), as well as Chapters 3 and 61 of the IRS Code (i.e., the Section 1441 rules applicable to withholding and reporting on payments made to nonresident aliens and the Form 1099 reporting and backup withholding requirements imposed on payments to US persons). The final regulations generally adopt the proposed and temporary regulations issued by the IRS in 2014 that "conformed" Chapters 3 and 61 to Chapter 4. Some modifications, however, were made in response to comments received by the IRS over the last two years. Along with the final regulations, the IRS also issued related temporary and proposed regulations under Chapters 3 and 4. The temporary and proposed regulations under Chapter 3 (T.D. 9808 and REG-134247-16) revise some of the withholding requirements for certain US-source income paid to foreign persons. They also outline the requirements foreign persons must satisfy to claim withholding tax refunds. The temporary and proposed regulations under Chapter 4 (T.D. 9809 and REG-103477-14) outline the requirements that a "sponsor" of a foreign financial institution (FFI) must meet to assume responsibility for performing due diligence on the FFI's behalf. A Tax Alert is pending.

The final and temporary regulations are effective 6 January 2017.

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Recent Tax Alerts

Asia

— Dec 30: Singapore introduces related party transaction reporting requirements (Tax Alert 2016-2246)

Canada & Latin America

— Jan 5: Chile establishes country-by-country reporting (Tax Alert 2017-0019)

— Jan 5: Peru amends temporary capital gains tax exemption (Tax Alert 2017-0016)

— Jan 5: Peru enacts tax reform (Tax Alert 2017-0015)

— Jan 5: Uruguay extends VAT rate reduction (Tax Alert 2017-0014)

— Jan 5: Brazil's Federal Revenue Agency issues Country-by-Country Reporting rules (Tax Alert 2017-0013)

— Jan 4: New Alberta tax credit to stimulate investment and create jobs (Tax Alert 2017-0004)

Europe

— Jan 4: Austria imposes cash register obligation from April 1, 2017 for monitoring financial transactions (Tax Alert 2017-0003)

— Jan 3: The latest on BEPS as of January 3 (Tax Alert 2017-0001)

— Dec 30: Luxembourg releases new circular on transfer pricing for companies carrying out intra-group financing activities (Tax Alert 2016-2248)

— Dec 30: French diverted profits law struck down by Constitutional Court (Tax Alert 2016-2247)

— Dec 30: Cyprus adopts Country-by-Country Reporting (Tax Alert 2016-2245)

Middle East

— Jan 5: Iraqi Tax Authority releases circular regarding issuance of No Objection Certificates (Tax Alert 2017-0012)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

2017-01

Internal Revenue Bulletin of January 3, 2017

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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: 2017-0022