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April 25, 2021
2021-0837

U.S. International Tax This Week for April 23

Ernst & Young's U.S. International Tax This Week newsletter for the week ending April 23 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

President Joe Biden will address a joint session of Congress on 28 April, where he is likely to make the case for Congress to act on his proposed $2.2 trillion infrastructure plan which includes significant changes to the US international taxation regime. The President reportedly will also unveil details of his American Families Plan proposal to address health care, childcare, education, family leave and other issues. The “Families Plan” reportedly will include roughly $1 trillion in spending and $500 billion in new tax credits, with the cost generally paid for with new tax increases on higher income US taxpayers and investors. According to press reports, the President will propose raising the top individual tax rate and tax rate on capital gains to 39.6%.

Senate Finance Committee Chairman Ron Wyden on 21 April reintroduced the Clean Energy for America Act, which proposes to eliminate fossil fuel tax incentives and replace the dozens of energy tax incentives currently in the Internal Revenue Code with a simpler set of provisions that encourage clean electricity and transportation and energy efficiency. The bill would provide an emissions-based, technology-neutral tax credit for clean electricity production and investments in grid improvements like stand-alone energy storage and high-capacity transmission lines qualifying for the full-value investment tax credit.

For fossil fuels, the bill reinstates the current taxation of multinational oil companies’ non-extraction income and “ensures multinational oil companies are not specially exempted from the 2017 tax law’s global minimum tax.”

The United Nations (UN) Committee of Experts on International Cooperation in Tax Matters on 20 April approved the final text of a new digital taxation article for the UN Model Treaty that would allow for source country taxation of revenue from certain automated digital services. New Article 12B (Income from Automated Digital Services) would allow a contracting state to tax gross automated digital services income earned by a beneficial owner that is resident in the other contracting state. The new provision would also provide an option to be taxed on a net basis. Automated digital services is defined as “any service provided on the Internet or another electronic network, in either case requiring minimal human involvement from the service provider” and includes online advertising services, online search engines, digital content services, online gaming, and cloud computing services. New Article 12B does not specify specific tax rates, which would be established through bilateral negotiations.

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Upcoming Webcasts

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.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (April 30)
During this Thought Center Webcast, Ernst & Young professionals will discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change. Panelists will provide updates on: (i) The US economy and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS.

Work from anywhere: How do we re-envisage our future after the unimaginable? (May 19)
During this EY Webcast, Ernst & Young professionals will highlight the journey of four organizations during this complicated year. Learn how they each reimagined how and where work gets done. Each panelist will share a unique point of view on the success and challenges of the past year, including a look ahead.

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Recent Tax Alerts

United States

— Apr 22: Ecuador and the United States sign Tax Information Exchange Agreement (Tax Alert 2021-0832)

Africa

— Apr 22: Ghana enacts Financial Sector Recovery Levy and introduces other tax reforms (Tax Alert 2021-0828)

— Apr 22: Angola's Indirect Tax Changes for 2021 discussed (Tax Alert 2021-0823)

— Apr 20: Kenya’s High Court rules that a Commercial Building Allowance is not premised on year of construction (Tax Alert 2021-0801)

— Apr 16: Uganda issues Tax Amendment Bills 2021 (Tax Alert 2021-0784)

Asia

— Apr 20: Indonesia issues implementing regulations for Job Creation Law (Tax Alert 2021-0804)— Apr 19: Russian Government submits bill on termination of tax treaty with the Netherlands to State Duma (Tax Alert 2021-0798)

Canada & Latin America

— Apr 22: Canadian government promises investment in Canadian immigration in new budget announcement (Tax Alert 2021-0833)

— Apr 22: Canada announces new pathway to permanent residence for essential services workers and international graduates (Tax Alert 2021-0826)

— Apr 21: Ecuador updates immigration guidelines related to COVID-19 (Tax Alert 2021-0819)

— Apr 21: British Columbia budget 2021-22 discussed (Tax Alert 2021-0817)

— Apr 20: Mexican Congress approves bill that would prohibit outsourcing services in Mexico (Tax Alert 2021-0815)

— Apr 20: Canada's Federal Budget 2021-22 | A recovery plan for jobs, growth and resilience (Tax Alert 2021-0808)

— Apr 20: Highlights of Canada's Federal Budget 2021-22 provided (Tax Alert 2021-0807)

— Apr 16: Argentine Government issues decree on promotional regime for direct investments in certain activities (Tax Alert 2021-0787)

Europe

— Apr 22: Norwegian Tax Authority announces digital VAT reporting will be implemented for 2022 (Tax Alert 2021-0824)

— Apr 21: The Latest on BEPS and Beyond | April 2021 edition (Tax Alert 2021-0813)

— Apr 20: Germany | CJEU rules that the VAT Directive precludes national rules prohibiting a partnership from VAT grouping (Tax Alert 2021-0810)

— Apr 20: OECD releases fourth batch of Stage 2 peer review reports on dispute resolution (Tax Alert 2021-0809)

— Apr 16: Slovenia adopts amendments to the Foreigners Act (Tax Alert 2021-0789)

— Apr 16: IMF and OECD release joint report on carbon pricing (Tax Alert 2021-0786)

— Apr 16: OECD releases third annual peer review report and revised peer review documents on BEPS Action 6 relating to prevention of treaty abuse (Tax Alert 2021-0783)

Oceania

— Apr 22: Australian Taxation Office issues draft guidance regarding the imported hybrid mismatch rule impacting large global groups (Tax Alert 2021-0821)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2021-16Internal Revenue Bulletin of April 19, 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.

 

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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