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Spotlight

US House Ways and Means Committee Chairman Kevin Brady on 24 July released a Tax Reform 2.0 framework that, as anticipated, focuses on three areas: making permanent the Tax Cuts and Job Act's individual and small business tax cuts; promoting savings for families and retirement; and spurring innovation by allowing start-ups to write off more of their initial costs. It does not contain a proposal to index capital gains to inflation, an idea that had been floated in recent months.

The two-page reform framework is intended to be the basis for listening sessions with House Republicans and constituents, which are expected to last through August. The Chairman was quoted as saying that legislative text and a committee markup will take place in September, to be followed by a House vote on the tax reform 2.0 legislation. According to the Chairman, the legislation will be divided into three separate bills come fall, to up the chance of Senate passage of at least some of the Republican proposals. Final passage of any tax legislation this fall will require the cooperation of Senate Democrats, something that may prove difficult before the mid-term congressional elections in November.

The Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) has completed its review of the eagerly-anticipated proposed Internal Revenue Code Section 965 repatriation transition regulations. The last step before their final release to the public is for Treasury to file the regulations in the Federal Register. OIRA received the proposed regulations on 13 July and deemed them to be not economically significant.

The Organisation for Economic Co-operation and Development (OECD) on 22 July published on its website the OECD's Secretary-General Report to G20 Finance Ministers and Central Bank Governors. The lengthy report was provided to the G20 Finance Ministers and Central Bank Governors at their meeting in Buenos Aires, Argentina on 21-22 July 2018.

Part I of the report provides an update of the activities and achievements of the OECD's ongoing tax agenda and future progress needed, in particular through the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Part II is a progress report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes.

The report further includes, as an annex, a report titled, Update on Tax Certainty: IMF/OECD Report for the G20 Finance Ministers and Central Bank Governors. This report, which was co-authored by the OECD and the International Monetary Fund, provides an update to the March 2017 report on tax certainty, and examined survey responses from 724 enterprises headquartered in 62 different countries and with regional headquarters in 107 different jurisdictions, as well as 25 national tax authorities.

The G20 also released a Communiqué at the end of their meeting, among other things confirming their commitment to seeking a consensus-based solution to address the impact of digitalization on the international tax system by 2020, with an update in 2019. This effectively underscores the desire of the G20 that the OECD should continue to lead in addressing this issue.

The OECD on 26 July also announced that it is now gathering input on the implementation of the BEPS Action 14 minimum standard in relation to the review of the sixth batch of jurisdictions (Argentina, Chile, Colombia, Croatia, India, Latvia, Lithuania and South Africa) and invited taxpayers to submit their input related to their experiences in these jurisdictions, via an electronic questionnaire, by 24 August 2018. This exercise is part of the process of the mutual agreement procedure peer review and monitoring process that the OECD launched in December 2016 under BEPS Action 14 in relation to more effective dispute resolution mechanisms.