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07 March 2021

U.S. International Tax This Week for March 5

Ernst & Young's U.S. Tax This Week newsletter for the week ending March 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.

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Spotlight

The Senate on 4 March voted to proceed to consideration of the budget reconciliation bill (H.R. 1319) reflecting President Biden's $1.9 trillion "American Rescue Plan" COVID-19 relief package. Following the vote, Senate Majority Leader Chuck Schumer offered a substitute amendment that included a number of changes to the House legislation. The bill, however, continues to include repeal of the IRC Section 864(f) worldwide interest expense allocation election.

If, as expected, the Senate approves the COVID-19 relief package with changes from the House bill, a conference process to resolve differences may be necessary or, at the very least, another House vote will be required.

Treasury Secretary Janet Yellen on 26 February said during a virtual G20 finance ministers and central bank governors meeting that the US would no longer push for Pillar One of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 project to be implemented on a safe harbor basis. Trump Administration Treasury Secretary Steven Mnuchin had insisted that Pillar One, addressing the allocation of multinational enterprise profits to market jurisdictions, be structured as a safe harbor. That position was generally opposed by US trading partners involved in the discussions.

Taking the US safe harbor proposal off the table is expected to be viewed as a major step forward in the global discussions. But negotiations will still require considerable work.

Speaking during an OECD webcast on 4 March, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, was quoted as saying that with the new US position, the goal is for the Inclusive Framework on BEPS to meet in late June or early July to reach a consensus agreement on Pillar One and Pillar Two. If agreement is reached, it will be presented at the G20 finance ministers meeting on 9-10 July. Saint-Amans indicated he does not expect any further Pillar discussion drafts. The Treasury Department on 2 March announced that Jose Murillo had accepted the position of Deputy Assistant Secretary for International Tax Affairs in the Office of Tax Policy. Most recently, Murillo was the Director of the International Tax and Transaction Services practice in EY's National Tax Department in Washington, DC.

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Upcoming Webcasts

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

United States

Asia

Canada & Latin America

Europe

— Mar 03: UK Budget 2021 discussed (Tax Alert 2021-0478)

Multinational

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Legislation

  • Congress poised to enact $1.9t COVID-relief bill with repeal of worldwide interest expense allocation — but what's next?

Transfer pricing news

  • Treasury to consider reviving expired transfer pricing aggregation regulations
  • IRS continues APA/MAP case closures despite COVID restrictions

OECD developments

  • OECD Forum on Tax Administration releases new handbook for International Compliance Assurance Programme (ICAP)
  • OECD holds public consultation on review of minimum standard on dispute resolution under BEPS Action 14
  • OECD releases 10th batch of peer review reports on BEPS Action 14 related to improving dispute resolution

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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: 2021-0489

 

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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