27 November 2019

U.S. International Tax This Week for November 27

Ernst & Young's U.S. International Tax This Week newsletter for the week ending November 27 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 Organisation for Economic Co-operation and Development (OECD) held a public consultation on the Secretariat Proposal for a "Unified Approach" under Pillar 1 of the BEPS 2.0 project on 21-22 November in Paris at the OECD Conference Centre. Representatives from business, labor groups, non-governmental organizations, and academia participated in the consultation to discuss their perspective. EY submitted a comment letter and a global team from EY participated in the consultation.

The OECD Secretariat laid out the timeline for meetings of the Inclusive Framework for the end of January 2020 and in June/July 2020, and suggested that, at a minimum, a high-level political agreement on the Pillar One framework must be achieved by the January meeting. Most business community representatives supported a go-slow approach, in recognition of the fact that the proposal involves fundamental changes to long-standing global tax norms that will have to be spelled out clearly and in detail.

One commonality voiced at the meeting was that the existing global transfer pricing system, based on the arm's-length principle, needs to be changed and should at least be augmented by some more formulaic rules. Public consultation videos (a total of 13 hours) are now available on OECD WebTV and can be viewed without registration.

At the time of publication of this Alert, the US has not released final foreign tax credit regulations and final and proposed Base Erosion and Anti-abuse Tax (BEAT) regulations, as anticipated. A senior Treasury official had said in mid-November their release was imminent. The BEAT regulations cleared the Office of Management and Budget's Office of Information and Regulatory Affairs several weeks ago.

On 13 November, the Spanish Supreme Court issued a favorable decision confirming the right of a US Regulated Investment Company (RIC) to obtain a refund of the Spanish withholding tax on dividends paid in excess. The US RIC had filed a reclaim to obtain a refund of the difference between the dividend withholding tax imposed and the reduced 1% applicable to Spanish Collective Investment Vehicles (CIVs), insofar as it implied discriminatory tax treatment for nonresidents in comparison with Spanish CIVs. See EY Tax Alert 2019-2096 for details.

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Upcoming Webcasts

Insights from tax year 2018 TCJA implementation and preparing for the new age of compliance (December 4)
During this Thought Center Webcast, Ernst & Young professionals will discuss how your company can continue to navigate the complexity and challenges of TCJA compliance and prepare for the next round.

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Recent Tax Alerts

Asia

Europe

Middle East

Multinational

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2019-48Internal Revenue Bulletin of November 25, 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: 2019-2101