November 8, 2020
U.S. International Tax This Week for November 6
Ernst & Young's U.S. International Tax This Week newsletter for the week ending November 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.
At the time of this publication, no winner has been declared in the 3 November US presidential race. Similarly, there are a number of open congressional races still be called, although a Democratic majority — albeit diminished — is expected in the House. The recent elections will clearly have a major impact on US tax policy in the coming year and going forward, but no meaningful insights are possible until the final results are tallied and a President-elect and the makeup of the next Congress is determined.
An EY Global Tax Webcast, How the US general election impacts the global corporate tax outlook, is scheduled for 12 November at 11:30 a.m. ET.
The Internal Revenue Service (IRS) will not release proposed regulations on previously taxed earnings and profits (PTEP) this year, according to a senior official. The anticipated PTEP regulations, which are important across a variety of provisions, have faced several delays over the years and are now expected for release in early 2021.
The IRS official was also quoted this week as saying that final regulations under IRC Section 245A on the dividends received deduction will be issued "very soon."
The official added that taxpayers can further expect proposed regulations on the Foreign Investment in Real Property Tax Act aspects of opportunity zones, as well as a revenue procedure that will discuss the interplay of a change in accounting method made by a controlled foreign corporation and the Global Intangible Low-Taxed Income rules.
The Organisation for Economic Co-operation and Development (OECD) and the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) recently released a Report on taxing virtual currencies that provides a cross-jurisdictional overview of the tax treatment and emerging tax policy issues in relation to virtual currencies. The jurisdictional overview is based on a questionnaire to identify domestic variations in the taxation of crypto-assets, focusing in particular on the treatment of virtual currencies for purposes of income tax, property tax and Value Added Tax.
Easily overshadowed by the recent release of the BEPS 2.0 Pillar One and Pillar Two documents, the Report covers three main areas: key concepts and definitions of blockchain and crypto-assets; the tax policy implications of several emerging issues related to the taxation of virtual currencies, e.g., stablecoins; and tax policy considerations related to virtual currencies. The Report is the first formal report of the OECD and Inclusive Framework specifically related to taxing virtual currencies and the related tax policy issues. The Report states that the OECD is currently developing technical proposals in order to ensure an adequate and effective level of reporting and exchange of information with respect to crypto-assets. EY Tax Alert 2020-2619 has details.
How the US general election impacts the global corporate tax outlook (November 12)
During this Webcast, one of the top-of-mind issues shaping conversations between global business leaders is what to expect after the US Presidential election on 3 November. While the results seem unpredictable, and may not be known immediately, we do know there will be significant implications for tax. In this webcast, panelists discuss practical information and critical insights to help navigate through an already complex tax policy landscape.
Recent Tax Alerts
— Nov 05: Kenya's Tax Appeals Tribunal rules VAT is applicable on sale of commercial property, loan-related fees are not subject to excise duty (Tax Alert 2020-2634)
— Nov 03: India releases implementation rules for Equalization Levy on e-commerce supply and services (Tax Alert 2020-2613)
Canada & Latin America
— Nov 05: EY Canada's Tax Matters @ EY for November 2020 (Tax Alert 2020-2628)
— Nov 02: Chile's IRS establishes new transfer pricing documentation requirements (Tax Alert 2020-2610)
— Nov 02: Canada Revenue Agency provides updates on CEWS and employee benefits (Tax Alert 2020-2606)
— Oct 30: Initial reporting due date for Mexico MDR obligations is fast approaching (Tax Alert 2020-2594)
— Nov 03: OECD releases report on taxing virtual currencies (Tax Alert 2020-2619)
— Nov 03: Cyprus | Anticipated tax measures to be implemented including adoption of withholding taxes on payments made to EU non-cooperative jurisdictions (Tax Alert 2020-2617)
— Nov 03: Japan and UK sign Comprehensive Economic Partnership Agreement (Tax Alert 2020-2616)
— Nov 02: Poland and the Netherlands sign protocol to revise tax treaty (Tax Alert 2020-2612)
— Nov 02: OECD releases economic impact analysis of BEPS 2.0 project proposals (Tax Alert 2020-2611)
— Oct 30: OECD releases new methodology for peer reviews of BEPS Action 13 on Country-by-Country Reporting (Tax Alert 2020-2598)
— Oct 30: French court rules taxes levied on capital gains on sale of French shares by non-EU companies is contrary to free movement of capital (Tax Alert 2020-2593)
— Oct 28: BREXIT | Status of UK citizens in Germany from January 1, 2021 discussed (Tax Alert 2020-2569)
Highlights of this edition include:
- OECD releases Pillar 1 and Pillar 2 blueprints, invites public comments
- Final regulations under Section 1446(f) set forth rules on withholding on transfers of partnership interests
- IRS concludes anti-abuse rule under Section 704(c) triggered in asset contribution to foreign partnership
- IRS confirms some modifications to debt instruments, other contracts to reflect LIBOR discontinuation will not result in a deemed taxable exchange
Transfer pricing news
- IRS ‘practice unit’ sets forth examination guidance on inclusion of stock based compensation in cost sharing arrangements
- IRS announces plans to limit use of ‘telescoping’ in APA and MAP cases
- IRS will consider amending existing APAs to reflect COVID-19 economic conditions
- OECD issues third batch of Stage review reports on dispute resolution
- OECD to release COVID-19-related transfer pricing guidance
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2020-46||Internal Revenue Bulletin of November 9, 2020|
| ||2020-45||Internal Revenue Bulletin of November 2, 2020|
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.