U.S. International Tax This Week for August 21

23 August 2020

Ernst & Young's U.S. International Tax This Week newsletter for the week ending August 21 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

Senate Republicans reportedly planned to introduce a limited coronavirus aid package that will include additional Paycheck Protection Program funding, liability protection, a federal unemployment benefit component, additional funding for coronavirus testing and schools, and funding for the US Postal Service, but it has not been released. The package reportedly does not include many of the proposed tax provisions found in the Republican-sponsored US$1 trillion Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act.

An Internal Revenue Service (IRS) Large Business and International (LB&I) division official this week said LB&I is gearing up for a major increase in refund claims through Form 1120-X, "Amended U.S. Corporation Income Tax Return," as a result of coronavirus aid legislation. Last spring's Coronavirus Aid, Relief, and Economic Security Act, among other things, amended IRC Section 172 to permit taxpayers to carryback losses from 2018 to 2020 for up to five years from the year of loss. Refund claims of over US$5 million, however, require Joint Committee on Taxation (JCT) review before a refund is made. The IRS official added that the Service is working internally and with the JCT to ensure that the process works efficiently.

The official further was quoted as saying the IRS is considering how to address its various compliance initiatives during the COVID-19 pandemic. LB&I reportedly plans to launch a large partnership program akin to the large corporate compliance program, but it is not expected to be rolled out before early 2021.

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Upcoming Webcasts

Global trade: Gaining control over your trade function in a volatile environment (August 24)
During this Thought Center Webcast, Ernst & Young professionals will discuss how technology and appropriate use of services can help you gain more control over trade operations. Learn how market-leading organizations are using this strategy to free up key trade resources so they can focus on what matters most – value creation and strategic priorities.

BorderCrossings . . . With EY transfer pricing and tax professionals (August 27)
During this Thought Center Webcast, Ernst & Young professionals will discuss supply chain resilience from various tax perspectives, including tax policy, indirect and income tax.

The evolving world of site selection | Corporate location in today’s rapidly changing environment (September 9)
During this Thought Center Webcast, Ernst & Young professionals will explore current trends in site selection domestically and abroad, how these trends are expected to change, and issues economic developers should consider..

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Recent Tax Alerts

United States

— Aug 14: USTR announces modifications to tariffs on EU goods under Section 301 (Tax Alert 2020-2071)

Africa

— Aug 18: Rwanda announces requirements for VAT exemption applications on imported machinery, capital goods and raw materials (Tax Alert 2020-2097)

— Aug 17: Kenya amends recently gazetted DTA with Mauritius (Tax Alert 2020-2088)

Asia

— Aug 14: India publishes detailed guidance on Mutual Agreement Procedure (Tax Alert 2020-2070)

Canada & Latin America

— Aug 19: Argentine Congress approves bill establishing new tax settlement plan (Tax Alert 2020-2103)

— Aug 18: Peru simplifies procedure for foreign tourists to claim a VAT refund (Tax Alert 2020-2099)

— Aug 18: Panama's National Assembly approves bill creating 'EMMA' special regime for manufacturing services (Tax Alert 2020-2094)

— Aug 14: Ecuadorian Constitutional Court declares unconstitutional executive decree requiring estimated income tax payments for fiscal year 2020 (Tax Alert 2020-2072)

Oceania

— Aug 19: Australian Taxation Office issues compliance guidelines for outbound interest-free related party loans (Tax Alert 2020-2102)

— Aug 17: Australia | Detailed analysis on final taxation ruling and guidance on the Australian thin capitalization arm's-length debt test (Tax Alert 2020-2080)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

2020-35

Internal Revenue Bulletin of August 24, 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: 2020-2109