May 16, 2021
U.S. International Tax This Week for May 14
Ernst & Young's U.S. Tax This Week newsletter for the week ending May 14 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.
There has been some movement toward compromise on an infrastructure package this week, with President Joe Biden suggesting he would be amenable to a corporate tax increase to 25%, and Senate Minority Leader Mitch McConnell saying he could go up to $800 billion on the cost of a plan. Following a White House meeting on 12 May that included President Biden, the Vice President, the Senate Majority Leader, the House Speaker and the House Minority Leader, Senator McConnell offered a more optimistic assessment on the chances of reaching an infrastructure deal. The Senate Minority leader said, "I think both sides would like to get an outcome" and reportedly indicated that congressional Republicans would support a smaller bill on which there could be bipartisan support, even if congressional Democrats used reconciliation on other infrastructure proposals not supported by Republicans.
Senate Republicans reportedly will present President Biden with a revised infrastructure proposal early the week of 17 May. The new plan reportedly will include more specifics and address how to pay for the package. The news followed a meeting at the White House on 13 May attended by President Biden and a group of 10 Republicans.
A senior Treasury official this week said during a virtual American Bar Association Tax Section meeting that the Treasury Green Book containing details and revenue estimates on President Biden's tax proposals will be released the last week in May. Those details are awaited by lawmakers to determine how the proposals would work and how much they would raise as the Administration pushes for transportation and human infrastructure plans financed with tax increases.
The House Financial Services Committee on 12 May reported out six bills, including one that would require the Securities and Exchange Commission to promulgate regulations requiring larger corporations to disclose country-by-country financial information on each of their subsidiaries, including profits, taxes paid, employees and tangible assets.
The Disclosure of Tax Havens and Offshoring Act (HR 3007) would require public companies with annual revenues of $850 million or more to disclose their total pre-tax profits, tangible assets and total amounts paid in state, federal and foreign taxes. The bill would also require companies to disclose a number of specific tax-related items for each of their subsidiaries, as well as on a consolidated basis, such as total accrued tax expenses, stated capital and total accumulated earnings. Republicans on the committee warned that the new tax disclosures would threaten companies' right to confidentiality.
The Internal Revenue Service issued Revenue Procedure 2021-26 on 11 May, updating Revenue Procedures 2019-43 (automatic method change procedural guidance) and 2015-13 (general method change procedural guidance). The new procedure establishes how controlled foreign corporations (CFCs) on an impermissible non-alternative depreciation system (non-ADS) or a permissible non-ADS method can make an automatic accounting method change to utilize an alternative depreciation system (ADS) method under IRC Section 168(g). This portion of the new procedure applies to Form 3115, "Application for Change in Accounting Method," filed on or after 11 May 2021, for a tax year of a CFC ending before 1 January 2024.
The revenue procedure also prescribes terms and conditions for accounting method changes made on behalf of CFCs, so that IRC Section 481(a) adjustments resulting from CFCs' method changes are properly included in computations of tested income and tested loss. Finally, the revenue procedure clarifies the "150 percent rule" that limits audit protection for CFCs. One of the purposes of the revenue procedure is to lessen the burden on CFCs of conforming their income and E&P computations with their qualified business asset investment computations.
International tax talk quarterly series with the EY Global Tax Desk Network (May 18)
During this Thought Center Webcast, Ernst & Young professionals across the region will highlight recent tax trends and important developments, including increased tax controversy and mitigation considerations, from country and regional perspectives.
A taxpayer’s guide to the International Compliance Assurance Programme (ICAP) (May 20)
During this EY Webcast, Ernst & Young professionals along with the Organisation for Economic Cooperation and Development (OECD) will discuss the recently announced third phase of ICAP.
Recent Tax Alerts
— May 11: Global labor and employment law strategic topics | April 2021 edition (Tax Alert 2021-0956)
— May 11: Algeria issues list of strategic activities for foreign direct investment (Tax Alert 2021-0948)
— May 07: Ghana Revenue Authority issues administrative guidelines on various tax measures (Tax Alert 2021-0929)
— May 13: Indian Tax Tribunal applies beneficial treaty rate to dividend distributed during the dividend distribution tax regime (Tax Alert 2021-0975)
— May 12: Vietnam's mandatory quarantine period extended to 21 days for all inbound travelers (Tax Alert 2021-0963)
— May 11: India issues thresholds for triggering “significant economic presence” in India (Tax Alert 2021-0943)
— May 07: India signs new migration and mobility agreement with United Kingdom (Tax Alert 2021-0935)
Canada & Latin America
— May 11: Uruguay extends due dates for filing certain tax returns and making advance payments of tax (Tax Alert 2021-0950)
— May 12: UK announces temporary measures relating to Right to Work checks to end on June 20 (Tax Alert 2021-0962)
— May 12: Swiss Federal Council issues official Dispatch on revised withholding tax reform (Tax Alert 2021-0961)
— May 11: UK issues guidance on new Plastic Packaging Tax (Tax Alert 2021-0951)
— May 10: CJEU issues decision on VAT concept regarding ”restaurant and catering services” within a catering area (Tax Alert 2021-0941)
— May 07: UK announces Global Talent visa fast track route for "prestigious award" winners (Tax Alert 2021-0936)
— May 12: Qatar releases transfer pricing FAQs (Tax Alert 2021-0952)
— May 11: Jordan clarifies scope of National Contribution Tax (Tax Alert 2021-0949)
— May 12: Australia issues 2021-22 Federal Budget (Tax Alert 2021-0964)
— May 13: OECD releases Ireland Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-0971)
— May 13: PE Watch | Latest developments and trends, May 2021 (Tax Alert 2021-0970)
— May 07: OECD releases Japan Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-0922)
Highlights of this edition include:
- US Treasury releases President’s plan to overhaul corporate tax system
- Senators Wyden, Brown and Warner release International Tax Framework
- President Biden lays out $1.8 trillion American Families Plan proposal
- Senate Finance Committee chairman reintroduces clean energy legislation
- Treasury Secretary proffers BEPS 2.0 Pillar One proposal to Inclusive Framework
- IRS issues proposed regs to coordinate WHT and gain deferral for certain foreign persons and partnerships investing in QOFs, clarify working capital safe harbor
- IRS releases FAQs on ICAP program for US multinational enterprises
- IRS extends time for submitting APA and MAP requests with e-signatures
- OECD releases consultation document with proposed changes to Commentaries to OECD Model Tax Convention on Article 9 (Associated Enterprises) and related articles
- OECD publishes Arbitration Profiles for 30 countries under MLI, clarifies entry into effect
- OECD releases fourth batch of Stage 2 peer review reports on dispute resolution
- OECD releases third annual peer review report and revised peer review documents on BEPS Action 6 relating to prevention of treaty abuse
- UN tax committee approves new digital taxation article for UN model tax treaty
- UN releases new Transfer Pricing Manual
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2021-20||Internal Revenue Bulletin of May 17, 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.