U.S. International Tax This Week for March 29

31 March 2019

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 29 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 House Ways and Means Committee on 27 March devoted an entire hearing to relitigating the benefits of the Tax Cuts and Jobs Act (TCJA). The hearing did not break much new ground, and members continued to debate the TCJA's international provisions, among other aspects of the legislation. No changes to the TCJA, large or small, are expected to be enacted anytime soon, though members have introduced bills addressing some high-profile technical corrections, and Democrats have introduced bills to dismantle parts of the law, including portions of the new international tax regime.

The US and India signed an agreement for the exchange of country-by-country (CbC) reports on 27 March. According to an Indian government announcement, the new agreement will enable both countries to exchange CbC reports filed by ultimate parent entities of international groups in the respective jurisdictions, for financial years beginning on or after 1 January 2016. Therefore, Indian constituent entities of US headquartered international groups that have already filed CbC reports in the US would not be required to file CbC reports locally in India.

In other CbC reporting developments, Uruguayan tax authorities this week extended a 31 March filing deadline. In general, the deadline for filing CbC reports for reporting fiscal years (RFYs) ending between 31 December 2017 and 30 November 2018 is 15 months after the end of the relevant fiscal year. Therefore, 31 March 2019 would have been the first deadline by which local filing would be required. However, this week, the Uruguayan tax authorities extended the filing deadline for RFYs ending 31 December 2017; the new deadline is now 30 April 2019. For multinational enterprise (MNE) groups with a RFY ending on or after 1 January 2018 and on or before 30 November 2018, the deadline continues to be 15 months after the last day of the RFY. For MNE groups with an RFY ending on or after 1 December 2018, the deadline is 12 months after the last day of the RFY.

The IRS in Announcement 2019-3 released a report this week on the US advance pricing agreement (APA) program covering the 2018 calendar year. A total of 107 bilateral APAs were executed in 2018, with Japan (39%) and Canada (20%) representing the largest number of countries. There were 203 APA applications filed in 2018, with Japan (34%) and India (21%) representing the largest number. Although most of the transactions covered in APAs executed in 2018 involved the sale of tangible goods or the provision of services, over 20% involved the use of intangible property. The median time for completion of an APA in 2018 was 40.2 months, up from 33.8 months in 2017.

The Organisation for Economic Co-operation and Development's (OECD) Forum on Tax Administration (FTA) on 28 March published seven new reports following its 26-28 March plenary meeting in Santiago, Chile, along with a communiqué. Among the more important of the released reports was "The Sharing and Gig Economy: Effective Taxation of Platform Sellers," which looks at various approaches for taxing income from the sale of goods or services in the sharing and gig economy. The FTA underscored that tax administrators continue to "prioritize implementation of the OECD/G20 international tax agenda, with good progress being made in supporting the implementation of Country-by-Country reporting, the Mutual Agreement Procedure and the exchange of rulings." The FTA, established in 2002, is an OECD-hosted forum for tax administrators from 53 countries formed to discuss global tax trends and ideas and their impact on tax administration.

In addition to the sharing and gig economy report, the FTA released:

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Upcoming Webcasts

The nexus debate and profit allocation rules and its business impact (April 18)
During this Thought Center Webcast, Ernst & Young professionals will cover the OECD's proposed changes to the nexus and profit allocation rules and how these changes, if implemented, will affect where and how profits derived from global business operations will be taxed, and likely repercussions for the business operations of taxpayers.

Are your clients digitally savvy? Join EY’s People Advisory Services America’s Signature Webcast to help them transform HR (April 23)
During this Thought Center Webcast, Ernst & Young professionals will demonstrate how companies from different industries have transformed their HR functions – and their reputations — as critical leaders in the organization.

Key insights on India’s M&A environment with EY M&A and Tax professionals (May 2)
During this Thought Center Webcast, Ernst & Young professionals will discuss the following topics: (i) Overview of India’s transaction and corporate M&A landscape; (ii) Recent transaction trends in India; (iii) Typical characteristics associated with M&A activity in India; and (iv) Key tax and structuring considerations for M&A activity in India.

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Recent Tax Alerts

United States

— Mar 25: US grants additional tariff exclusion status to limited set of imports from China (Tax Alert 2019-0608)

— Mar 25: The latest on BEPS as of March 25 (Tax Alert 2019-0613)

Africa

— Mar 27: Kenya's High Court reiterates importance of proper processes and procedures in taxation (Tax Alert 2019-0627)

— Mar 26: South Africa publishes amendments broadening scope of electronic services for VAT purposes (Tax Alert 2019-0618)

— Mar 26: Kenya's High Court nullifies Kenya-Mauritius Double Taxation Agreement (Tax Alert 2019-0619)

Canada & Latin America

— Mar 28: Jamaica issues 2019/20 budget with focus on growth with equity (Tax Alert 2019-0631)

— Mar 27: Nova Scotia budget 2019-20 discussed (Tax Alert 2019-0622)

— Mar 22: Quebec budget 2019-20 discussed (Tax Alert 2019-0600)

Europe

— Mar 28: Cyprus publishes draft Mandatory Disclosure Rules (Tax Alert 2019-0633)

— Mar 27: Brexit implications on social security relationship between UK and Switzerland discussed (Tax Alert 2019-0625)

— Mar 27: Italy issues Law Decree regarding UK financial services intermediaries in the case of a "No-deal" Brexit (Tax Alert 2019-0626)

— Mar 27: Changes to Russia’s withholding tax and beneficial ownership rules at the end of 2018 discussed (Tax Alert 2019-0623)

— Mar 25: German tax authorities confirm that fees for online advertising should not be subject to withholding (Tax Alert 2019-0607)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

2019-14

Internal Revenue Bulletin of April 1, 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: 2019-0641