U.S. International Tax This Week for May 29

31 May 2020

Ernst & Young's U.S. International Tax This Week newsletter for the week ending May 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

Treasury has sent final regulations on the foreign-derived intangible income (FDII) provision and the global intangible low-taxed income (GILTI) provision to the Office of Management and Budget Office of Information and Regulatory Affairs (OIRA) for review. The final IRC Section 250 rules were received by OIRA on 26 May. The IRS issued proposed regulations under IRC Section 250 (REG-104464-18) in March 2019, providing guidance for calculating the deduction allowed to a domestic corporation for its FDII and GILTI. The proposed regulations primarily provide guidance for calculating a domestic corporation's FDII; proposed regulations for calculating GILTI were released in September 2018.

Governments are ready to refocus their attention on the Base Erosion and Profit Shifting (BEPS) 2.0 project after having been sidetracked by the global COVID-19 pandemic, according to Pascal Saint-Amans, Director of the Organisation for Economic Co-operation and Development (OECD) Centre for Tax Policy and Administration. The OECD official was quoted this week as saying that there has been significant progress in regard to revenue sourcing, scope, nexus, base determination and business line segmentation, and that these areas would be the subject of future public consultation.

Saint-Amans suggested that two key trends in the BEPS area have emerged in the current environment. He said that a number of countries are beginning to believe that it is possible to ring-fence the digital economy, pointing to the fact that digital companies are doing well during the pandemic and effectively ring-fencing themselves. The US has been steadfast in its opposition to this point of view, arguing it is not possible to ring-fence the digital economy because the entire global economy is moving toward digitalization. The second trend, Saint-Amans reported, is that countries will not stand for tax avoidance by corporations that receive coronavirus stimulus funding.

While the OECD official said a third pillar is not being considered that would focus on a global excess profits tax as a means to raise revenue following the coronavirus pandemic, he suggested there could be a third pillar internally at the OECD that would focus on BEPS rules for lesser developed countries that may not benefit sufficiently from the original BEPS projects.

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EY Guides, Surveys, and Reports

EY COVID-19 Response Tracker | Transfer Pricing
The COVID-19 pandemic is intensifying the uncertain environment for transfer pricing. Many jurisdictions are therefore adopting new measures designed to help taxpayers meet their compliance-related obligations. These include postponing deadlines for transfer pricing declarations, forms and filings, including Country-by-Country (CbC) notification and CbC Report filing deadlines.

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Upcoming Webcasts

COVID-19: Beyond headline legal, people and trade stimulus measures (June 2)
During this Thought Center Webcast, Ernst & Young professionals from EY Law, People Advisory Services, and Trade and Transfer Pricing will discuss the actions governments around the globe are taking in response to the COVID-19 crisis and explore how corporate entities around the world are responding.

Navigating the Asia-Pacific Transfer Pricing landscape through COVID-19 (June 2)
During this Thought Center Webcast, Ernst & Young professionals will discuss potential options available to companies to manage transfer pricing, customs and indirect tax holistically; and to reduce negative impacts in a cash-focused COVID-19 environment.

COVID-19: How global trade finance is being disrupted and redefined (June 3)
During this Thought Center Webcast, International Trade and Forfaiting Association (ITFA) and EY banking and supply chain professionals will explore the challenges and risks facing the banking and corporate sectors.

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Recent Tax Alerts

Africa

— May 26: Rwanda issues directive on utilization of credit notes (Tax Alert 2020-1377)

Asia

— May 27: India Tax Administration extends applicability of transfer pricing safe harbor rules to financial year 2019-20 (Tax Alert 2020-1393)

Canada & Latin America

— May 28: Argentina issues long-awaited transfer pricing regulations (Tax Alert 2020-1407)

— May 27: Costa Rica's government establishes pilot program with Panama to allow international drivers to transport goods between those countries (Tax Alert 2020-1386)

— May 27: Canada Revenue Agency releases update on personal tax return filing deadline (Tax Alert 2020-1384)

Europe

— May 28: Austria implements fixed-cost subsidy to mitigate impact of COVID-19 (Tax Alert 2020-1410)

— May 28: Dutch Government extends and expands emergency measures in response to COVID-19 (Tax Alert 2020-1409)

— May 28: European Commission publishes proposal for recovery plan and adjusts 2020 Work Programme (Tax Alert 2020-1397)

— May 27: Italy enacts "Relaunch Decree" to manage COVID-19 crisis: Indirect tax implications (Tax Alert 2020-1390)

— May 27: The Czech Republic deposits its instrument of ratification of the MLI (Tax Alert 2020-1389)

— May 27: Turkey increases BITT rate for F/X transactions and withholding rate on income from short-term lease certificates and commercial papers (Tax Alert 2020-1388)

— May 26: Denmark proposes new withholding tax regime for dividends (Tax Alert 2020-1376)

— May 26: CJEU rules Luxembourg's fiscal unity regime infringes EU law (Tax Alert 2020-1375)

— May 26: Italy enacts "Relaunch Decree" to further manage COVID-19 (Tax Alert 2020-1365)

Middle East

— May 28: Updated COVID-19: Israel's Ministry of Economy provides temporary procedure for urgent business needs (Tax Alert 2020-1401)

Multinational

— May 27: OECD releases Liechtenstein Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2020-1387)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

	2020-22	Internal Revenue Bulletin of May 26, 2020
	2020-23	Internal Revenue Bulletin of June 1, 2020

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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: 2020-1413