December 13, 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.
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.
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.
Recent Tax Alerts
— Dec 10: Kenya proposes amendments to Income Tax and VAT Acts (Tax Alert 2020-2835)
— Dec 10: Kenya's High Court rules that retrospective application of a tax law is not unconstitutional but must be practical and reasonable (Tax Alert 2020-2833)
— Dec 07: Kenyan Government issues public notice on expected resumption of pre-COVID tax rates (Tax Alert 2020-2814)
— Dec 07: Indonesia updates tax holiday incentive and provides guidance for 300% R&D super deduction (Tax Alert 2020-2819)
— Dec 07: Indonesia enacts Job Creation Law (Tax Alert 2020-2816)
Canada & Latin America
— Dec 10: Canada's Fall Economic Statement reintroduces stock option proposals (Tax Alert 2020-2830)
— Dec 10: Preview of Canada's revised T1134 form provided (Tax Alert 2020-2829)
— Dec 09: Mexico postpones legislative action on outsourcing bill to 2021 (Tax Alert 2020-2824)
— Dec 08: EY Canada's Tax Matters @ EY for December 2020 (Tax Alert 2020-2821)
— Dec 10: PE Watch: Latest developments and trends, December 2020 (Tax Alert 2020-2836)
— Dec 10: Polish Ministry of Finance announces planned deferral to 30 June 2021 of certain provisions of new withholding tax reform (Tax Alert 2020-2832)
— Dec 07: EU Finance Ministers consider tax priorities and expansion of DAC obligations (Tax Alert 2020-2815)
— Dec 04: Italy publishes ministerial guidance on Mandatory Disclosure Rules (Tax Alert 2020-2808)
— Dec 10: Saudi Arabia introduces e-invoicing (Tax Alert 2020-2834)
— Dec 04: Australia introduces instant asset write-off alternative $5b turnover test and opt out rule (Tax Alert 2020-2807)
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 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
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2020-50||Internal Revenue Bulletin of December 7, 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.