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07 June 2020

U.S. International Tax This Week for June 5

Ernst & Young's U.S. International Tax This Week newsletter for the week ending June 5 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 Office of the United States (US) Trade Representative (USTR) this week announced it is investigating adopted or proposed digital services taxes (DSTs) in 10 jurisdictions, including Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom. The investigation is being conducted under Section 301 of the 1974 Trade Act. In a 2 June statement, Senate Finance Committee Chair Chuck Grassley and ranking member Ron Wyden said, “these digital services taxes unfairly target and discriminate against U.S. companies.” The Senators also said they “support USTR’s use of the Section 301 investigation process to examine these discriminatory unilateral measures.”

The USTR conducted a similar investigation into France’s 3% DST last year, culminating in a finding in December 2019 that the French DST created an unreasonable or discriminatory burden to US commerce. At the time, the USTR proposed that the US impose tariffs of up to 100% on approximately US$2.4 billion of French-origin goods. The US and France earlier this year reached agreement to defuse their ongoing DST dispute, with the parties agreeing to take no further action through the end of 2020 in the hopes there will be a multilateral digital tax agreement by that time under the auspices of the of the Organisation for Economic Co-operation and Development (OECD) BEPS 2.0 project.

The IRS recently issued Rev. Proc. 2020-15, providing a list of jurisdictions with which the US has information exchange agreements with respect to certain deposit interest paid to residents of those jurisdictions. The revenue procedure also includes a list of jurisdictions with which it has been determined it is appropriate for the US to have automatic exchange of information with respect to such information. Singapore was added to the list of jurisdictions with which the US has a relevant information exchange agreement in effect.

The OECD on 4 June announced the release of the Toolkit on the Taxation of Offshore Indirect Transfers, issued as part of the Platform for Collaboration on Tax (PCT). The toolkit is meant to help developing countries implement policies for taxing offshore indirect transfers of assets. The taxation of indirect transfer of assets – for example, mineral rights and licensing rights for telecommunications – is of particular interest to developing states. The PCT is a joint initiative of the International Monetary Fund, OECD, United Nations and World Bank that has been undertaken at the request of the G20.

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Upcoming Webcasts

Transfer pricing controversy (June 8)
During this Thought Center Webcast, Ernst & Young professionals from various jurisdictions will discuss the various transfer pricing issues which are getting the attention of tax authorities by way of short, practical case studies of audit cases and current transfer pricing tax court decisions.

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EY Guides, Surveys and Reports

EY's Global COVID-19 Immigration Tracker and EY's PAS Mobility Tracker
EY's Global COVID-19 Immigration Tracker provides a snapshot of the immigration-related measures being implemented around the globe. EY's PAS Mobility Tracker provides a snapshot of the changing tax, social security and residency rules for mobile employees affected by COVID-19, including business travelers.

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Recent Tax Alerts

Africa

— May 29: Namibia issues 2020 Budget (Tax Alert 2020-1421)

Asia

Canada & Latin America

Europe

Middle East

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include: Legislation

  • Congress considers further action to address coronavirus pandemic

IRS news

  • IRS finalizes proposed Section 385 regulations with no substantive changes, leaves distribution rules in effect for now
  • Treasury and IRS announce references to NAFTA in US tax treaties should be interpreted as references to the USMCA
  • IRS offers limited relief for filing Forms 8858 or 8865

Transfer Pricing news

  • IRS announces modifications for filing APA and MAP requests, addresses pending and executed APAs

OECD news

  • New refocusing on BEPS, OECD official says
  • OECD holds public consultation on 2020 review of CbCR
  • OECD hosts webcast offering update on tax work during COVID-19 crisis; July IF meeting delayed to October 2020

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2020-24Internal Revenue Bulletin of June 8, 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: 2020-1481

 

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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