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13 December 2020

U.S. International Tax This Week for December 11

Ernst & Young's U.S. International Tax This Week newsletter for the week ending December 11 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 Director of the Internal Revenue Service (IRS) Advance Pricing and Mutual Agreement (APMA) Program said this week that the US is seeing more questions about the transfer pricing consequences of the COVID-19 pandemic from taxpayers with existing, or in process, advance pricing agreements (APAs). John Hughes, APMA’s Director, was quoted as saying APMA will work with its foreign counterparts for taxpayers in the APA negotiation phase, to develop a method that avoids possible complications resulting from the pandemic. It will be more difficult to address the pandemic for those with existing APAs, Hughes said. In those cases, APMA will need “good, cold, hard data” to determine whether the APA should be modified. “We need to know exactly what happened with your business, and exactly what is the assistance that you’re seeking.”

An Organisation for Economic Co-operation and Development (OECD) official this week was quoted as saying that draft transfer pricing guidance that addresses COVID-19 pandemic issues has been submitted to the Inclusive Framework for approval and is expected to be released at the end of this year or early in 2021. The new guidance will address a narrow set of issues not currently addressed in the OECD transfer pricing guidelines. She said comparability analysis for 2020 will be addressed, as well as losses and the allocation of COVID-specific costs.

The OECD Forum on Tax Administration (FTA) met this week and issued an 8 December communiqué in which the FTA announced that the piloted International Compliance Assurance Program (ICAP) will become an established program among an expanded group of tax administrations. ICAP, a voluntary joint risk assessment initiative that is designed to stem the flow of issues into mutual agreement procedures, has been piloted by a small group of major tax administrations, including those of Australia, Canada, Italy, Japan, the Netherlands, Spain, the United Kingdom and the US, along with several multinational enterprises.

An IRS spokesperson was quoted as saying the agency, “intends to continue in ICAP as it transitions from a pilot to an established FTA program in 2021.” The IRS spokesperson said more information on the ICAP program will be provided in early January 2021. More information is available on the OECD’s ICAP website.

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Upcoming Webcasts

Tax in the time of COVID-19 (December 18)
The coronavirus (COVID-19) and the resulting economic crisis – all occurring in an election year – have made reacting to tax and trade developments more complicated and more difficult. Panelists will provide updates on: (i) Elections, US economy and tax policy; (ii) What’s happening at the IRS; and (iii) Breaking developments. Register for this Thought Center Webcast.

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Recent Tax Alerts

Africa

Asia

Canada & Latin America

Europe

Middle East

Oceania

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Treasury and IRS news

  • Treasury and IRS finalize regulations to reduce possibility of double taxation caused by anti-abuse rules on GILTI gap period
  • IRS officials provide international regulatory update

Transfer Pricing news

  • US, Mexico renew competent authority agreement on unilateral APAs for maquiladoras
  • IRS updates list of jurisdictions for automatic exchange of CbC reports
  • IRS reviewing stock-based compensation in cost-sharing context

OECD Developments

  • OECD will hold virtual public consultation on BEPS 2.0 Pillar 1 and Pillar 2 in mid-January 2021
  • OECD releases Consultation Document on 2020 review of BEPS Action 14
  • OECD releases 2019 mutual agreement procedure statistics, 2019 mutual agreement procedure awards
  • OECD releases report on taxing virtual currencies

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2020-50Internal Revenue Bulletin of December 7, 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: 2020-2839

 

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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