February 21, 2021
U.S. International Tax This Week for February 19
Ernst & Young's U.S. Tax This Week newsletter for the week ending February 19 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.
House Ways and Means Committee Chairman Richard Neal conceded this week that there is no consensus among Democrats in Congress on the approach to take in terms of US taxation of multinationals — some consider it a revenue source while others want to reexamine Tax Cuts and Jobs Act (TCJA) provisions. The Chairman added that in the end, "Congress will work closely with the administration to secure favorable outcomes for the U.S. businesses headquartered right here."
On the topic of a corporate rate increase, Chairman Neal said harmonization of rates with the Organisation for Economic Co-operation and Development (OECD) makes some sense and, while nothing has been decided, the economic downturn "ought to cause us to be careful." The Chairman also indicated that he objects to retroactive taxation and noted the importance of putting the pandemic and recession behind us.
He said it is clear after meeting with President Biden on 5 February that, as soon as the current round of coronavirus relief is put in place, Democrats plan to proceed with an infrastructure initiative that includes a revival of the Build America Bonds program.
Treasury Secretary Janet Yellen has suggested that a corporate tax rate increase to 28% could be proposed in what is expected to be the infrastructure-plus "Build Back Better" package, but the intention to pay for the bill has since become less certain. There are press reports that Biden Administration officials and congressional Democrats may be open to an infrastructure bill that does not include tax increases and is instead paid for with debt.
The Platform for Collaboration on Tax — a joint effort of the OECD, United Nations, International Monetary Fund and World Bank Group — recently released a toolkit designed to help developing countries with the successful implementation of effective transfer pricing documentation requirements. The toolkit compiles information on transfer pricing documentation and analyzes policy choices and legislative options. EY Tax Alert 2021-0353 has details.
The OECD Forum on Tax Administration (FTA) on 18 February released a new handbook for the International Compliance Assurance Programme (ICAP), which for the first time is now open to all FTA administrations. The OECD describes ICAP as a voluntary program that provides for "coordinated risk assessment of large MNE groups by tax administrations in several jurisdictions using a group's Country-by-Country reports, master file, local files and other transfer pricing information." The OECD on 17 February also issued the 2021 Global Forum Capacity Building Report, laying out the Global Forum's capacity-building program and outreach activities that were conducted in 2020. The Global Forum supports members "in tackling offshore tax evasion by monitoring, reviewing and assisting jurisdictions to implement international standards" related to tax transparency and exchange of information.
Recent Tax Alerts
— Feb 15: Thailand enacts new VAT rules for foreign e-business and digital services (Tax Alert 2021-0354)
— Feb 12: New special measures to support Hong Kong residents to settle and remain in Canada discussed (Tax Alert 2021-0340)
— Feb 12: India releases 2021-22 Union Budget (Tax Alert 2021-0339)
— Feb 12: Hong Kong introduces tax concessions for carried interest (Tax Alert 2021-0338)
Canada & Latin America
— Feb 18: Uruguayan Executive Power modifies the promotional regime for construction activities considered 'great economic dimension projects' (Tax Alert 2021-0378)
— Feb 18: Uruguayan Executive Power increases tax benefits granted to investment projects (Tax Alert 2021-0377)
— Feb 17: Canada confirms hotel quarantine measures and airport and land border testing (Tax Alert 2021-0367)
— Feb 17: German Ministry of Finance publishes working draft of Act to Combat Tax Avoidance and Unfair Tax Competition (Tax Alert 2021-0369)
— Feb 17: Luxembourg implements defensive measures related to EU-listed non-cooperative jurisdictions (Tax Alert 2021-0368)
— Feb 16: Cyprus Tax Authorities publish 10-year government bond yield rates for NID purposes (Tax Alert 2021-0361)
— Feb 15: Hungarian Ministry of Finance issues guidance on Mandatory Disclosure Rules (Tax Alert 2021-0352)
— Feb 16: Israeli Tax Authority publicly presents its view on profit split application for R&D centers (Tax Alert 2021-0362)
— Feb 17: OECD releases 10th batch of peer review reports on BEPS Action 14 related to improving dispute resolution (Tax Alert 2021-0370)
— Feb 16: The latest on BEPS and Beyond for February 2021 (Tax Alert 2021-0357)
— Feb 15: OECD, UN, IMF and World Bank Group present toolkit on the implementation of effective transfer pricing documentation requirements (Tax Alert 2021-0353)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2021-07||Internal Revenue Bulletin of February 16, 2021|
| ||2021-08||Internal Revenue Bulletin of February 22, 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.