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08 September 2019

U.S. International Tax This Week for September 6

Ernst & Young's U.S. International Tax This Week newsletter for the week ending September 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 Treasury Department on 30 August, announced the entry-into-force dates of protocols to the US tax treaties with Japan and Spain. The protocol with Japan entered into force on 30 August, and the protocol with Spain will enter into force on 27 November. No information is available regarding the entry into force of the protocols to the US-Switzerland and US-Luxembourg tax treaties. All four protocols, which had been stalled in the US Senate for nearly a decade, were approved by the full Senate on 16-17 July. EY Tax Alert 2019-1565 has details.

The Japanese protocol generally modernizes provisions of the US-Japan Treaty; key measures include:

  • Revised dividend withholding tax exemption
  • General exemption on cross-border interest payments
  • New definition of indirect interest in real property
  • Mandatory binding arbitration procedures
  • Revised exchange of information provisions
  • Expanded and strengthened provisions regarding assistance in the collection of taxes

The Japanese protocol will have effect for withholding taxes (e.g., related to dividends and interest) for amounts paid or credited on or after the first day of the third month following the date on which the protocol enters into force, i.e., 1 November. For all other taxes, the Japanese protocol will apply to tax years beginning on or after 1 January 2020.

The Spanish protocol contains the most significant changes as compared to the other three protocols and generally modernizes several provisions of the US-Spain Treaty. Some of the key provisions of the Spanish protocol include:

  • Revised dividend withholding tax exemption
  • New fiscally transparent entity rules
  • General exemption from source-country tax on cross-border interest, royalties and capital gains
  • A new comprehensive limitation on benefits (LOB) provision
  • Mandatory binding arbitration procedures
  • Revised exchange of information provisions

For withholding taxes, the Spanish protocol generally will apply to amounts paid or credited on or after 27 November, the date on which the protocol enters into force. For taxes determined by reference to a tax period, the protocol will apply for tax years beginning on or after 27 November (e.g., 1 January 2020, for calendar-year taxpayers). In all other cases, the protocol will apply on or after 27 November.

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Upcoming Webcasts

International Tax Talk (September 10)
During this Thought Center Webcast, Ernst & Young professionals will provide you with information on major tax law changes in the countries and jurisdictions covered by our US-based Global Tax Desk Network.

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Recent Tax Alerts

United States

Africa

Asia

Canada & Latin America

Europe

Middle East

Oceania

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Treasury and IRS news

— IRS issues proposed regulations addressing cloud-based and other digital transactions

— IRS begins to increase enforcement efforts in cryptocurrency space

— IRS will allow domestic partnerships, S corps to apply proposed GILTI regulations before 22 June 2019

Transfer Pricing news

— US Court of Appeals affirms Tax Court’s decision in Amazon case

— IRS withdraws “Altera Memo” Directive on cost-sharing arrangement stock- based compensation

OECD Developments

— OECD releases United States Stage peer review report on implementation of Action 14 minimum standard

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2019-37Internal Revenue Bulletin of September 9, 2019
 2019-36Internal Revenue Bulletin of September 3, 2019
 2019-35Internal Revenue Bulletin of August 26, 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: 2019-1578

 

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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