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06 January 2019

U.S. International Tax This Week for January 4

Ernst & Young's U.S. International Tax This Week newsletter for the week ending January 4 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 Republican-dominated Congress failed to enact year-end tax legislation as 2018 came to a close, leaving the new, divided 116th Congress to address — at least in theory — Tax Cuts and Jobs Act (TCJA) technical corrections, tax extenders and other tax-related legislation. The House on 20 December had approved the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018, addressing two tax-extender provisions, retirement policy, TCJA technical corrections, Internal Revenue Service (IRS) reform provisions, and disaster relief. The Senate did not take up the bill, however, which would have required Democratic support for passage.

Congress also failed to enact certain necessary spending bills in late December, forcing the Government to enter into a partial government shutdown beginning at midnight on 21 December. As of press time, the Government remains in partial shutdown as the Trump Administration and congressional Republicans spar with congressional Democrats over border security funding.

In one of his last acts as House Ways and Means Committee Chairman before Democrats took control of the House, Kevin Brady on 2 January published a discussion draft of the Tax Technical and Clerical Corrections Act. Provisions in the discussion draft were developed by the Joint Committee on Taxation staff, as well as the staffs of the Ways and Means Committee, Senate Finance Committee and Treasury. The draft is meant to provide information to stakeholders and an opportunity to offer feedback on the provisions, including on potential additional technical corrections that might be considered. Incoming Ways and Means Committee Chairman Richard Neal previously indicated he would hold hearings on the TCJA and on potential changes to correct the law.

It is unclear if ongoing Office of Management and Budget (OMB) review of TCJA regulations will be affected by the partial government shutdown. The OMB Office of Information and Regulatory Affairs is currently reviewing proposed regulations under Section 250 on the deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI), as well as final regulations on the Section 965 transition tax.

Also just before the holidays, the IRS issued proposed regulations implementing Sections 245A(e) and 267A (enacted by the TCJA), regarding hybrid dividends and certain amounts paid or accrued in hybrid transactions or with hybrid entities. The proposed regulations also include rules under Sections 1503(d), 6038, 6038A and 7701. The IRS further released proposed regulations under Section 864(c)(8) on the tax treatment of foreign partners' gains on the sale of an interest in a US partnership.

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Upcoming Webcasts

Taxation of the digital economy in 2019 (January 15)
As businesses look for more ways to monetize their digital assets, global tax policymakers are rushing to keep pace, delivering corresponding new policies and regimes for taxing the digital economy. Being ill-equipped, unprepared or otherwise unable to respond to the new requirements can lead to compliance risks, business disruption, unanticipated costs and reputation risk. During this Thought Center Webcast, Ernst & Young professionals will help you understand the current state and prepare for the future.

Global oil and gas transactions review 2019 (February 14)
With positivity in the transactions market and a focus on portfolio restructuring, observers expected 2018 to be a busy year for deals. But as the year played out, oil price volatility, geopolitical tension and questions around oversupply likely disrupted some deal completions. Expectations for 2019 include an increase in private equity investment and cross-sector M&A, driven by technology and digital. But will oil and gas companies continue to look closer to home for their deals? During this Thought Center Webcast, Ernst & Young professionals will discuss these issues.

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Recent Tax Alerts

United States

Asia

Canada & Latin America

— Jan 03: Colombia enacts tax reform (Tax Alert 2019-0028)

Europe

Middle East

— Jan 02: Jordan amends Income Tax Law (Tax Alert 2019-0008)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2019-01Internal Revenue Bulletin of January 2, 2019
 2019-02Internal Revenue Bulletin of January 7, 2019

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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: 2019-0038

 

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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