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January 24, 2021
2021-0156

U.S. International Tax This Week for January 22

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 22 is now available. Prepared by Ernst & Young's National Tax Department in Washington, D.C., this weekly update summarizes important news, cases, and other developments in U.S. taxation.

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Spotlight

Joe Biden was inaugurated as the 46th President of the United States on 20 January, and with Vice President Kamala Harris holding the tiebreaking vote, the Senate is now split 50-50 Democrats to Republicans. Against the backdrop of this new political landscape, Treasury Secretary-designate Janet Yellen on 19 January testified at her Senate Finance Committee confirmation hearing, confirming that the incoming Administration plans to delay tax increases for now due to the coronavirus pandemic.

Yellen noted that Biden had said that eventually, as part of a larger package with spending and investment proposals, the President would want to repeal parts of the 2017 tax cuts that benefited the wealthy and large companies, and reverse incentives for companies to offshore operations and profits. However, Biden has been clear that he does not want to completely repeal the Tax Cuts and Jobs Act. She said a provision in that law had the byproduct of rewarding corporations for moving operations offshore.

Yellen also said the US will work with other countries in negotiations to stop a "race to the bottom" on corporate taxation and, within that process, ensure competitiveness of American corporations. She affirmed that it is important for US companies to be globally competitive and said the Organisation for Economic Co-operation and Development (OECD) negotiations are important for that reason. In response to a written question regarding the current OECD BEPS 2.0 negotiations that was posed to the Treasury Secretary-designate by a member of the Senate Finance Committee following her testimony, Yellen wrote: "the Administration will vigorously reengage with multilateral efforts to update global tax rules in ways that establish minimum taxation, prevent profit-shifting, and support a level playing field." She added that if confirmed, she would ensure that Treasury "immediately and vigorously engages with the international tax negotiations at the OECD."

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Upcoming Webcasts

BorderCrossings ... With EY transfer pricing and tax professionals (January 28)
During this Thought Center Webcast, Ernst & Young LLP (US) and Ernst & Young LLP (India) transfer pricing professionals who have been involved in the US-India competent authority negotiations over the past several years will provide an update on the overall US-India tax authority relationship. They’ll also discuss results of the 2020 meetings between the two governments.

International tax talk quarterly series with the EY Global Tax Desk Network (February 9)
During this Thought Center Webcast, Ernst & Young professionals will discuss the most pertinent recent global tax developments affecting your business. Panelists will include representatives from our EY Global Desks and Global Tax Policy and will cover perspectives from the OECD, European Union, Latin America and Asia Pacific.

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Recent Tax Alerts

United States

— Jan 21: USTR releases findings of Section 301 investigation on DST regimes of Austria, Spain and the UK, and 301 findings on Vietnam's currency valuation practices (Tax Alert 2021-0148)

Africa

— Jan 20: Zambian Government issues 2021 Tax Amendment Acts and Regulations (Tax Alert 2021-0125)

Asia

— Jan 21: Korea enacts 2021 tax reform bill (Tax Alert 2021-0149)

Canada & Latin America

— Jan 21: Peru enacts new tax measures for 2021 (Tax Alert 2021-0140)

— Jan 20: Peru enacts new preferential tax regime for agribusiness (Tax Alert 2021-0136)

— Jan 20: Peru no longer requires certain recipients of corporate income from investment funds to keep accounting books and records (Tax Alert 2021-0135)

— Jan 20: Peru-Japan income tax treaty will apply beginning January 1, 2022 (Tax Alert 2021-0134)

— Jan 20: New regulations outline financial information banks must report to Peruvian tax authority (Tax Alert 2021-0133)

— Jan 15: Brazilian Superior Court of Justice addresses whether technical service fees are subject to withholding tax under treaty with Spain (Tax Alert 2021-0105)

Europe

— Jan 21: Ireland publishes updated Corporation Tax Roadmap (Tax Alert 2021-0147)

— Jan 20: Italian Tax Authorities issue final guidelines on Digital Services Tax (Tax Alert 2021-0132)

— Jan 20: Spain delays first reporting of Digital Services Tax and Financial Transaction Tax (Tax Alert 2021-0129)

— Jan 20: German Government issues draft law on modernization of withholding tax relief and various additional topics (Tax Alert 2021-0128)

— Jan 15: Poland introduces new obligation to publish reports on tax strategy (Tax Alert 2021-0113)

— Jan 15: Italian Government announces deferrals for DST payments for 2020 (Tax Alert 2021-0110)

— Jan 15: European Commission launches consultation on EU digital levy (Tax Alert 2021-0109)

— Jan 15: France introduces new tax and social security measures for 2021 (Tax Alert 2021-0107)

Multinational

— Jan 21: The Latest on BEPS and Beyond | A 2020 review (Tax Alert 2021-0139)

— Jan 19: The latest on BEPS and Beyond for January 2021 (Tax Alert 2021-0122)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2021-03Internal Revenue Bulletin of January 19, 2021

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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.

 

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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