April 18, 2021
U.S. International Tax This Week for April 16
Ernst & Young's U.S. Tax This Week newsletter for the week ending April 16 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.
President Joe Biden this week began his outreach on the $2.2 trillion American Jobs Plan infrastructure proposal that is coupled with tax increases and changing Tax Cuts and Jobs Act (TCJA) international tax provisions included in the Made in America Tax Plan. The President met on 12 April with congressional lawmakers of both parties and from both the House and Senate, with Republicans reportedly arguing against raising corporate taxes and in favor of a narrower package. It was also announced that President Biden will address a Joint Session of Congress on 28 April, following the customary invitation by the Speaker of the House, Nancy Pelosi. The President is expected to make the case for Congress to act on his proposed infrastructure plan.
Looking ahead, President Biden is set to detail a second plan focused on individuals, the American Families Plan, in the coming weeks. This likely will include proposed tax increases targeting individuals and could include increasing the top tax rate and capital gains changes. The American Jobs Plan and the American Families Plan could be combined or stay separate. Speaker Pelosi said on 8 April that she expected there will be two bills.
The Internal Revenue Service (IRS) on 12 April released proposed regulations (REG-121095-19) that would allow certain non-US persons and non-US-owned partnerships, including private equity, real estate, and other funds, to reduce or eliminate withholding imposed under IRC Sections 1445, 1446(a) and 1446(f) on eligible gains deferred and invested in a qualified opportunity fund (QOF), provided certain requirements are met. Such persons must timely obtain from the IRS an applicable “eligibility certificate” and meet certain specified, related requirements in order to include so-called “security-required gains” in their QOF deferral election.
The TCJA created Opportunity Zones (OZs) by adding IRC Section 1400Z-1 and IRC Section 1400Z-2 to encourage investment in economically-distressed areas by giving tax incentives to taxpayers who invest and hold onto investments in OZs through QOFs. The proposed regulations would coordinate the deferral election under IRC Section 1400Z-2(a) with the withholding rules in IRC Sections 1445, 1446(a) and 1446(f).
The IRS recently released new frequently asked questions (FAQs) and answers on the International Compliance Assurance Program (ICAP). The FAQs are directed at US multinationals enterprises (MNEs) that may be considering the program. ICAP is a voluntary risk assessment and assurance program designed to facilitate open and cooperative multilateral engagement between large MNE groups and tax administrations in jurisdictions where the MNE groups have business activities. ICAP differs from existing cross-border dispute resolution processes such as Advance Pricing Agreements, Mutual Agreement Procedures and arbitration, all of which are intended to eliminate rather than simply lessen risk. EY Tax Alert 2021-0766 has details.
EY on 12 April submitted a comment letter on the European Union (EU) Public Consultation for a Fair & Competitive Digital Economy – Digital Levy. The letter provides EY's perspective on the considerations raised in the consultation for the design of an EU digital levy. The European Commission launched a public consultation on a new digital levy on 18 January, the aim of which is to “ensure fair taxation in the digital economy, while at the same time contributing to Europe’s recovery.”
EY Guides, Surveys, and Reports
EY's Worldwide VAT, GST and Sales Tax Guide 2021
Outlining value-added tax (VAT) systems in 137 jurisdictions, the 2021 edition of EY's annual reference book, Worldwide VAT, GST and Sales Tax Guide, is now available. All of the content is current as of January 1, 2021. New chapters for 2021 include: Côte d'Ivoire (Ivory Coast), Jamaica and Lesotho. The UK chapter also discusses the Trade and Cooperation Agreement (TCA) between the UK and EU, which came into effect on January 1, 2021, and the impact of Brexit on the VAT system of Great Britain and Northern Ireland.
ASEAN-6 panel discussions: Integrated regional value chains – Part 1: Consumer products and medical technology (April 20)
During this EY Webcast, Ernst & Young professionals will be hosting sector-focused discussions to explore answers to many open questions. Guest panelists from government investment agencies in key ASEAN countries will be sharing insights on individual country strengths and how complementary segments of a value chain can be optimized across multiple ASEAN locations.
Potential US international tax reform (April 22)
With the new Biden Administration and Democratic control of Congress, there has been ongoing activity with respect to both US corporate income tax proposals and global proposals under the Organisation for Economic Co-operation and Development’s (OECD’s) BEPS 2.0 project. These proposals, if enacted, may be quite sweeping, with potentially material impact on the international taxation of US corporations. During this Thought Center Webcast, Ernst & Young professionals will discuss these developments.
ASEAN-6 panel discussions: Integrated regional value chains – Part 2: Electronics and automotive (April 27)
During this EY Webcast, guest panelists from government investment agencies in key ASEAN countries will be sharing insights on individual country strengths and how complementary segments of a value chain can be optimized across multiple ASEAN locations.
BorderCrossings . . . with EY transfer pricing and tax professionals (April 29)
During this Thought Center Webcast, Ernst & Young professionals will have an in-depth discussion of BEPS 2.0 for 2021.
Recent Tax Alerts
— Apr 13: Kenya’s Tax Appeal Tribunal provides guidance on taxation of professional and managements fees under Double Tax Treaty Agreement (Tax Alert 2021-0755)
— Apr 13: Ghana enacts various tax amendments introduced in 2021 Budget (Tax Alert 2021-0754)
— Apr 15: China clarifies procedures for processing payments for transfer pricing adjustments (Tax Alert 2021-0768)
— Apr 13: Hong Kong proposes to allow a tax deduction for foreign taxes charged on gross income basis (Tax Alert 2021-0748)
Canada & Latin America
— Apr 14: Argentine entities with controlling ultimate parent entities in the United States should determine whether they have to file the local CbC report (Tax Alert 2021-0765)
— Apr 12: Argentine Government modifies bill it plans to send to Congress that would raise corporate income tax rates (Tax Alert 2021-0749)
— Apr 09: Government reaches agreement with representatives of labor and business sectors on outsourcing services in Mexico (Tax Alert 2021-0740)
— Apr 09: Manitoba budget 2021-22 discussed (Tax Alert 2021-0736)
— Apr 08: Costa Rica's tax administration publishes resolution on Advance Pricing Agreements (Tax Alert 2021-0733)
— Apr 15: Spanish Ministry of Taxation approves Mandatory Disclosure Regime reporting forms and deadlines (Tax Alert 2021-0767)
— Apr 15: Ireland’s Department of Finance to host virtual seminar on International Tax (Tax Alert 2021-0763)
— Apr 15: Greek Tax Authority issues guidance on tax treatment of stock option plans (Tax Alert 2021-0762)
— Apr 15: European Commission proposes VAT exemption for vital goods and services distributed by the EU in times of crisis (Tax Alert 2021-0761)
— Apr 09: Spanish Government publishes MDR Regulations (Tax Alert 2021-0730)
— Apr 13: OECD releases consultation document with proposed changes to Commentaries to OECD Model Tax Convention on Article 9 (Associated Enterprises) and related articles (Tax Alert 2021-0753)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
|Internal Revenue Bulletin of April 12, 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.