February 7, 2021
U.S. International Tax This Week for February 5
Ernst & Young's U.S. Tax This Week newsletter for the week ending February 5 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.
There is broad support among congressional Democrats to fix some of the problems they see in the 2017 Tax Cuts and Jobs Act, according to senior congressional tax writing committee aides. And, International tax is one area that is "ripe for activity" in Congress during 2021, a Senate Finance Committee senior tax counsel said this week, pointing to the heavy reliance on revenue from corporate and international tax proposals in President Biden's tax plan. The committee counsel was quoted as saying that if Congress is looking for revenue, "international tax is one [area] that is certainly viable without getting into any of the specifics of the Biden plan." The advisor in particular noted as problematic the 10% exemption for qualified business asset investments under the Global Intangible Low-Taxed Income (GILTI) rules that creates an incentive to invest overseas, as well as a similar incentive in the Foreign-derived intangible income (FDII) rules.
According to the tax counsel, Senate Finance Committee Chairman Ron Wyden is expected soon to release a policy document that will map out a framework for international tax reform. The coming policy document will shadow the policy goals of the Biden Administration's proposals, which include rewarding companies that invest in the US and ending incentives to move investments and jobs overseas.
In regard to the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 Pillar One negotiations, Democrats on the congressional tax writing committee may not be that far apart from their Republican counterparts. Democrats on the Finance Committee and the House Ways and Means Committee reportedly share opposition to unilateral Digital Services Taxes and share the Trump Administration's position on Pillar One, according to the Ways and Means tax counsel. Any support among Democrats for a proposed multilateral solution on Pillar One will be based on the revenue effects and positions taken by stakeholders, he said.
The US and Argentina on 27 January signed a competent authority agreement to exchange Country-by-Country reports, according to the IRS Jurisdiction Status Table. The arrangement is based on the 2016 US-Argentina Tax Information Exchange Agreement.
The OECD on 1 February held a public consultation with respect to the review of the minimum standard on dispute resolution under the BEPS Action 14 project. The proposals on which the OECD was seeking comments were outlined in an earlier Consultation Document. While the majority of the comments made by panelists and other participants in the public consultation were broadly in line with the recommendations made by the OECD, there was some divergence in opinion on key proposals relating in particular to their implementation in developing countries. EY Tax Alert 2021-0252 has details. The final draft of the Platform for Collaboration on Tax — a joint initiative of the OECD, International Monetary Fund, United Nations and World Bank — will be released in the first quarter 2021, according to a World Bank official last week. The draft toolkit was released in June 2020 with the goal of helping developing countries adopt better tax treaty policy and more equitable results.
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.
Recent Tax Alerts
— Feb 04: Rwanda issues general rules on transfer pricing (Tax Alert 2021-0257)
— Feb 02: Botswana's Government presents 2021 Budget to Parliament (Tax Alert 2021-0247)
— Feb 01: Indian Fiscal Budget 2021 | Key tax proposals impacting individuals and employers discussed (Tax Alert 2021-0232)
Canada & Latin America
— Feb 04: EY Canada's Tax Matters @ EY for February 2021 (Tax Alert 2021-0255)
— Feb 02: Mexico establishes threshold for reporting customized transactions under the mandatory disclosure regime (Tax Alert 2021-0244)
— Feb 01: Peru modifies regulations for banks that report financial information to Peruvian tax authorities (Tax Alert 2021-0235)
— Feb 01: Canada announces new international travel measures and restrictions (Tax Alert 2021-0231)
— Jan 29: Mexico's mandatory disclosure tax return site is now available (Tax Alert 2021-0217)
— Feb 04: Cypriot Tax Department announces extension of deadlines for DAC6 submissions (Tax Alert 2021-0258)
— Feb 02: Italy announces non-application of penalties for submission of mandatory disclosure reports made by 28 February 2021 (Tax Alert 2021-0243)
— Feb 02: Cyprus expands treaty network as of 1 January 2021 (Tax Alert 2021-0242)
— Feb 02: Dutch Senate passes bill amending the Mining Act related to the removal or re-use of mining works and investment deductions (Tax Alert 2021-0241)
— Feb 01: Italy's 2021 Budget Law: A review of key tax measures (Tax Alert 2021-0228)
— Jan 29: Greece extends deadline for submission of mandatory disclosure reports (Tax Alert 2021-0220)
— Feb 04: Turkey amends tax laws on deduction of financial expenses and withholding rates on multi-year construction works (Tax Alert 2021-0259)
— Feb 03: OECD holds public consultation on review of minimum standard on dispute resolution under BEPS Action 14 (Tax Alert 2021-0252)
— Feb 01: OECD Inclusive Framework political leaders promote global consensus following OECD's public consultation on Pillar One and Two Blueprints (Tax Alert 2021-0234)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2021-05||Internal Revenue Bulletin of February 1, 2021|
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.