June 27, 2021
U.S. International Tax This Week for June 25
Ernst & Young's U.S. Tax This Week newsletter for the week ending June 25 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 on 24 June gave his approval to a bipartisan infrastructure "framework" that had been worked out the day before by White House officials and a group of bipartisan senators. The framework reportedly sticks to the bipartisan plan's spending limits of $579 billion in new spending, $974 billion over five years and $1.2 trillion over eight years.
Most of President Biden's tax increase proposals are omitted, although one of the pay-fors is reducing the tax gap. According to a White House fact sheet, the $579 billion in new spending would be invested in roads, bridges, airports, passenger and freight rail, and EV (electric vehicle) infrastructure, plus non-transportation items like water and broadband infrastructure. Other provisions described in the sheet include an upgrade of power infrastructure, including by building thousands of miles of transmission lines to facilitate the expansion of renewable energy, including through a new Grid Authority; and an Infrastructure Financing Authority intended to leverage billions of dollars into clean transportation and clean energy.
Congressional action on the infrastructure plan, including timing, remains unclear. House Speaker Nancy Pelosi suggested during a news conference that the House would not vote on an infrastructure bill until both that bill and a follow-on budget reconciliation bill are passed by the Senate. Soon after announcing his approval of the framework, President Biden made clear that he expects Congress to pass both a bipartisan infrastructure bill and a reconciliation bill, and will only sign the legislation if they come to him at the same time. The President said at a news conference: "If they don't come, I'm not signing; real simple. If only one comes to me … I'm not signing. It's in tandem."
The Democratic-formulated reconciliation bill, which is expected to include major tax increases, is likely to address issues such as health care, caregiving, and climate change. Movement on a reconciliation bill will require the House and Senate agreeing to the same budget resolution with reconciliation instructions.
The Organisation for Economic Co-operation and Development (OECD) on 22 June published "Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods." The new rules reflect the interest of a number of jurisdictions to have information exchange relating to digital platforms. The framework complements the "Model Rules for Reporting by Platform Operators With Respect to Sellers in the Sharing and Gig Economy," which the OECD released in July 2020. Those rules require platform operators to report data on their sellers to tax administrations and provide a standardized approach for tax administrations to collect data on transactions that digital platforms undertake and the income they earn as a result. The OECD developed an international legal framework, the "Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income Derived through Digital Platforms." The framework includes an agreement and rules for the participating jurisdictions' competent authorities that may be used to facilitate the automatic exchange of information collected under the model rules and promote international tax compliance.
2021 outlook for international tax reform (June 29)
During this Thought Center Webcast, Ernst & Young professionals will discuss what President Biden's budget, corporate revenue proposals and other global developments could mean for international taxation.
Recent Tax Alerts
— Jun 23: Kenya's recent changes and developments to business laws and the regulatory environment discussed (Tax Alert 2021-1242)
— Jun 23: Hong Kong enacts legislation to allow a tax deduction for foreign taxes charged on gross income basis (Tax Alert 2021-1240)
— Jun 23: Hong Kong enacts legislation regarding tax treatment of court-free amalgamation of companies (Tax Alert 2021-1239)
Canada & Latin America
— Jun 23: Mexico repeals VAT rule that exempted certain purchases of temporarily imported goods from nonresidents from VAT withholding (Tax Alert 2021-1250)
— Jun 23: Canada's quarantine and travel restriction updates for CoPR holders provided (Tax Alert 2021-1248)
— Jun 23: Costa Rican Congress approves, in second and final vote, a tax incentive regime for foreign investors, rentiers and retirees (Tax Alert 2021-1246)
— Jun 18: Mexico's tax authorities publish list of expected effective income tax rates for large taxpayers (Tax Alert 2021-1222)
— Jun 23: France's non-EU VAT refund claims must be filed electronically effective 1 July 2021 (Tax Alert 2021-1238)
— Jun 22: Jordan implements transfer pricing rules (Tax Alert 2021-1237)
— Jun 18: Turkey’s new law on restructuring certain receivables includes customs receivables (Tax Alert 2021-1225)
— Jun 17: New trade agreement between UK and Australia includes multiple immigration provisions (Tax Alert 2021-1213)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2021-25||Internal Revenue Bulletin of June 21, 2021|
| ||2021-26||Internal Revenue Bulletin of June 28, 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.