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August 8, 2021

U.S. Tax This Week for August 6

Ernst & Young's U.S. Tax This Week newsletter for the week ending August 6 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.

Top of the Week

Arrangements between US and UK competent authorities clarify understanding of terms in the US-UK tax treaty

On July 26, 2021, the US and UK competent authorities signed two arrangements regarding the interpretation of the terms "North American Free Trade Agreement (NAFTA)" and "resident of a Member State of the European Community" in the Limitation on Benefits (LOB) provision of the Convention between the United States of America and the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains, signed on July 24, 2001, as amended by the Protocol signed on July 19, 2002 (the US-UK Treaty). The first arrangement clarifies that the references to the NAFTA in the LOB provision of the US-UK Treaty will be understood as references to the Protocol Replacing the North American Free Trade Agreement with the Agreement between the United States of America, the United Mexican States, and Canada (USMCA). The second arrangement clarifies that a "resident of a Member State of the European Community" for purposes of the LOB provision of the US-UK Treaty continues to include a resident of the UK. EY Tax Alert 2021-1448 has details

Mexico extends deadline for complying with tax law on outsourcing services to September 1

In the July 31, 2021 edition of the Official Gazette, Mexico's Executive branch extended the August 1, 2021 deadline for complying with the tax provisions in recent labor reform legislation affecting outsourcing services. The extended deadline is September 1, 2021. EY Tax Alert 2021-1456 has details.

Recent Tax Alerts


— Jul 30: Second Circuit holds foreign trust owner/beneficiary liable for 35% penalty for failure to report trust distribution, rejecting argument that penalty limited to 5% for failure to report trust ownership (Tax Alert 2021-1447)

Internal Revenue Service

— Jul 30: IRS rules that solar facilities are not public utility property (Tax Alert 2021-1446)


— Aug 06: Australia's Refugee Talent pilot and international border update provided (Tax Alert 2021-1470)

— Aug 05: Cyprus to introduce new tax measures as part of its National Recovery and Resilience Plan (Tax Alert 2021-1469)

— Aug 05: Luxembourg Tax Authorities issue guidance on administrative fines related to tax infractions and procedures applicable to criminal tax offenses (Tax Alert 2021-1468)

— Aug 05: Spanish National High Court issues favorable decisions with respect to international holding structures after ECJ Danish cases (Tax Alert 2021-1465)

— Aug 04: Poland’s proposed tax reform includes significant changes to tax system (Tax Alert 2021-1462)

— Aug 03: Israel publishes tax measures under its 2021 - 2022 proposed budget (Tax Alert 2021-1460)

— Aug 03: Georgia postpones VAT on foreign suppliers of digital services to 1 October 2021 (Tax Alert 2021-1459)

— Aug 02: Mexico extends deadline for complying with tax law on outsourcing services to September 1 (Tax Alert 2021-1456)

— Jul 30: Arrangements between US and UK competent authorities clarify understanding of terms in the US-UK tax treaty (Tax Alert 2021-1448)

— Aug 02: Cypriot Tax Department announces update of XML Schema for DAC6/MDR submissions (Tax Alert 2021-1445)

— Jul 29: UK waives quarantine requirements for fully vaccinated individuals traveling to England from Europe and US effective August 2 (Tax Alert 2021-1437)

— Jul 22: 2021 Annual Report of the USCIS Ombudsman provided (Tax Alert 2021-1406)

— Jul 22: Canada easing travel restrictions for U.S. citizens and Permanent Residents (Tax Alert 2021-1405)


— Aug 04: What to expect in Washington (August 4) (Tax Alert 2021-1464)


— Aug 04: New Hampshire law establishes a voluntary paid family and medical leave insurance program (Tax Alert 2021-1466)

— Aug 03: Oregon law delays collection of paid family and leave insurance contributions to January 1, 2023 (Tax Alert 2021-1461)

IRS Weekly Wrap-Up

Final Regulations

 TD 9889Investing in Qualified Opportunity Funds; Correction


 2021-48Guidance on Single-Employer Defined Benefit Pension Plan Funding Changes under the American Rescue Plan Act of 2021
 2021-49Guidance on the Employee Retention Credit under Section 3134 of the Code and on Miscellaneous Issues Related to the Employee Retention Credit

Internal Revenue Bulletin

 2021-31Internal Revenue Bulletin of August 2, 2021
 2021-32Internal Revenue Bulletin of August 9, 2021

Because the matters covered herein are complicated, U.S. 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.