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28 February 2021

U.S. International Tax This Week for February 26

Ernst & Young's U.S. International Tax This Week newsletter for the week ending February 26 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 House of Representatives on 26 February is expected to vote to approve President Biden’s $1.9 trillion COVID relief plan. The “American Rescue Plan” will then go to the Senate for consideration where the legislation is expected to be amended and passage likely will require the support of all 50 Democrats, with Vice President Kamala Harris providing the tie-breaking vote.

Among other things, the package would provide direct payments, child tax credit expansion, earned income tax credit and child care tax credit enhancements, as well as an international tax change that would repeal the election for US affiliated groups to allocate interest expense on a worldwide basis beginning in 2021. IRC Section 864(f) was added to the tax code in 2004 but the provision had been deferred several times. Repeal of the worldwide interest allocation rules would raise roughly $22 billion over 10 years, according to a Joint Committee on Taxation estimate.

The Senate Finance Committee this week held a confirmation hearing on the nomination of Adewale O. Adeyemo to be Treasury Deputy Secretary, during which he and committee members expressed a shared interest in working with the Organisation for Economic Co-operation and Development (OECD) on a multilateral approach to global taxation. Asked about the OECD multilateral discussions on Base Erosion and Profit Shifting (BEPS) 2.0 and digital services taxes, Adeyemo said the goal will be to protect US tax revenue and ensure that companies compete on a level playing field. The nominee echoed earlier statements by Treasury Secretary Janet Yellen that the Administration is ready to resume BEPS 2.0 discussions.

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Upcoming Webcasts

Work from anywhere | How to manage implications of workforce transformation (March 4)
During this Webcast, Ernst & Young professionals will discuss the latest developments, share market insights, and break down pertinent issues to consider in managing the challenges and embracing the opportunities of a “work from anywhere” approach..

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS (March 5)
During this Thought Center Webcast, Ernst & Young professionals will provide updates on: (i) US economy, elections and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS.

Latin America ‘nearshoring’ webcast series | Costa Rica session (March 16)
Recent disruptions to global supply chains have heightened interest in the concept of “nearshoring” (i.e., the transferring of a business operation to a nearby country from a more distant one). To provide information and help answer questions about nearshoring in Latin America, EY is sponsoring a series of webcasts featuring our local country professionals. This Thought Center Webcast will focus on Costa Rica.

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Recent Tax Alerts

Africa

Asia

Canada & Latin America

Europe

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2021-09Internal Revenue Bulletin of March 1, 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.

Document ID: 2021-0435

 

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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