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July 18, 2021

U.S. International Tax This Week for July 16

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


Senate Budget Committee Democrats this week reached agreement on a top line $3.5 trillion budget resolution with instructions, paving the way for a "human infrastructure" bill that will center on health care, climate, and caregiving. Under the plan, the bill would pass under the reconciliation process and would require the votes of all 50 Democratic senators (plus the Vice-President), to take place sometime after Congress returns from the August recess in September.

Describing what was agreed, Senate Majority Leader Chuck Schumer said: "Every major program that President Biden has asked us for is funded in a robust way." The Senate Finance Committee reportedly has been drafting tax provisions that would be used to pay for the legislation. There are four major areas for potential tax revenue-raisers under consideration: a corporate income tax increase and minimum tax; major international tax changes; increasing taxes on capital income; and individual tax increases targeting the wealthy.

The bipartisan group of Senators who negotiated the high-level $1 trillion infrastructure deal with President Biden also met this week to try to nail down the details amid issues over the pay-fors for the plan, particularly the proposed $40 billion investment in the Internal Revenue Service to combat the tax gap. Senate Majority Leader Schumer on 15 July announced that the first vote on the bipartisan infrastructure package will take place on 21 July. The tight deadline, which Republicans described as strong-arming the process, is viewed as a strategy to force finalization of the bill. The Majority Leader also set a 21 July deadline for the Senate Democratic Caucus to agree on final numbers and a framework for the budget resolution.

Treasury Secretary Janet Yellen this week was quoted as saying that Treasury is pushing Congress to include a global minimum tax in a budget reconciliation bill. The Treasury Secretary's statement followed last week's support by G20 Finance Ministers of the Inclusive Framework on Base Erosion and Profit Shifting's (BEPS) high level agreement on a two-pillar solution to address the tax challenges arising from digitalization of the economy. The Biden Administration strongly supports a global minimum tax, which is the centerpiece of BEPS 2.0 Pillar Two.

Secretary Yellen said that Pillar One (addressing nexus and the allocation of profits) will be on a slightly slower track. She suggested that Pillar One may be "ready in the spring of 2022," adding "we will try to determine at that point what's necessary for implementation." Congressional action on Pillar One with regard to new taxing rights will likely require treaty ratification by a two-thirds vote in the Senate. Any deal would also likely require changes to the US effectively connected income rules.

Upcoming Webcasts

Tax risk and controversy for companies operating in Asia-Pacific (July 26)
During this EY Webcast, Ernst & Young professionals will review key findings of the 2021 EY Tax risk and controversy survey and discuss why companies operating in Asia-Pacific should build their Tax Controversy Department of the Future without delay.

Recent Tax Alerts

United States

— Jul 02: Revenue proposals detailed in Treasury Green Book would significantly affect international private companies and families (Tax Alert 2021-1317)


— Jul 15: Nigerian Tax Authority issues guidance on Stamp Duties compliance (Tax Alert 2021-1358)

— Jul 02: Nigeria’s Federal High Court Issues Practice Directions on tax matters related to the Federal Inland Revenue Service (Tax Alert 2021-1301)


— Jul 14: Taiwan amends capital gains tax law for transfers of real property (Tax Alert 2021-1344)

— Jul 12: South Korea launches pilot project 'Electronic Travel Authorization' for visa-free entry for foreign nationals; official launch in September 2021 (Tax Alert 2021-1328)

— Jul 12: India releases significant international travel announcements (Tax Alert 2021-1327)

— Jul 02: China announces new Stamp Duty Law (Tax Alert 2021-1303)

Canada & Latin America

— Jul 15: Peru implements new, stricter requirements for residence visa applications (Tax Alert 2021-1364)

— Jul 14: Canada's proposed changes to taxation of employee stock options now law (Tax Alert 2021-1356)

— Jul 13: Brazil announces new entry rules for Venezuelan nationals, maritime crew and individuals who recovered from COVID-19 (Tax Alert 2021-1349)

— Jul 13: Canada's Bill C-208 includes changes to section 84.1 and section 55 (Tax Alert 2021-1339)

— Jul 13: Canada's 2021 budget implementation bill receives Royal Assent (Tax Alert 2021-1338)

— Jul 12: EY Canada's Tax Matters @ EY for July 2021 (Tax Alert 2021-1330)


— Jul 15: German Ministry of Finance issues updated guidance on extraterritorial taxation of IP, extending deadline for applicability of retroactive exemption in “clear” treaty cases (Tax Alert 2021-1355)

— Jul 14: French Parliament approves Amending Finance Bill for 2021 (Tax Alert 2021-1347)

— Jul 13: Russia's law on activities of foreign Internet companies in Russia signed by the President (Tax Alert 2021-1332)

— Jul 12: PE Watch | Latest developments and trends, July 2021 (Tax Alert 2021-1325)

— Jul 12: G20 Finance Ministers endorse key components of global tax changes and invite holdouts to back the agreement (Tax Alert 2021-1324)

— Jul 05: Spanish National High Court overturns denial of withholding tax exemption on dividend payments to EU shareholder (Tax Alert 2021-1320)

— Jul 05: Ireland broadly supports OECD agreement with reservation on rate (Tax Alert 2021-1319)

— Jul 02: OECD announces conceptual agreement in BEPS 2.0 project (Tax Alert 2021-1308)

— Jul 02: Poland introduces VAT option on financial services to be effective 1 January 2022 (Tax Alert 2021-1302)

Middle East

— Jul 14: Turkey issues Communiqué on Ultimate Beneficial Owner declaration requirement (Tax Alert 2021-1348)

— Jul 14: Saudi Arabia clarifies GCC origin of goods (Tax Alert 2021-1345)

IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2021-28Internal Revenue Bulletin of July 12, 2021
 2021-27Internal Revenue Bulletin of July 6, 2021

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.