August 22, 2021
U.S. International Tax This Week for August 20
Ernst & Young's U.S. International Tax This Week newsletter for the week ending August 20 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.
The House of Representatives, in recess since the beginning of August, will return the week of 23 August to vote on the Senate-passed budget resolution that will lay the groundwork for passage of Democratic priorities in a proposed $3.5 trillion budget reconciliation bill this fall. House Speaker Nancy Pelosi has continued to insist that the House will not take up the infrastructure bill passed by the Senate until the Senate passes the reconciliation bill after Labor Day. Putting the Speaker in a difficult position is a group of moderate House Democrats who are demanding a vote on the infrastructure bill soon and threatening to withhold their vote on the budget resolution. Democratic progressives, meanwhile, are insisting that the House first pass the reconciliation bill before taking up infrastructure.
Tucked in the Infrastructure Investment and Jobs Act recently passed by the Senate is a cryptocurrency measure that may have escaped notice. It would apply information reporting requirements to digital assets (including cryptocurrency), and update the definition of broker with the intention of reflecting the realities of how digital assets are acquired and traded. More specifically, cryptocurrency and other "digital assets" sold by customers of "brokers" would be subject to Form 1099-B reporting and cost-basis reporting if the infrastructure bill becomes law. The bill would add to the definition of the term broker "any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person." The amendments would be effective for information returns filed in 2024 for the 2023 calendar year. See EY Tax Alert, Senate-passed infrastructure bill would impose information-reporting requirements on sales of cryptocurrency and other digital assets, dated 19 August 2021.
Given the considerable discussion in the Senate in regard to this provision, there may be further efforts by Congress in the future to address a difficult-to-understand issue that is attracting increasing political heft.
The US and Germany reportedly agreed in July 2021 on implementation of spontaneous exchange of multinationals' country-by-country reports for the period 1 January 2020 through 1 January 2021. The agreement is based on Article 26 of the 1989 US-Germany tax treaty, as amended in 2006. The information that is exchanged reportedly will be subject to confidentiality and other safeguards found in the tax treaty, including the provisions that restrict the use of the exchanged information. According to the press, the parties are negotiating a competent authority arrangement to address the issue and the recent agreement is an interim measure.
BorderCrossings . . . with EY transfer pricing and tax professionals (August 26)
During this EY Webcast, Ernst & Young professionals will discuss the “realistic alternatives” principle in transfer pricing. Our panelists will explore the principle’s evolution from various sources through its codification in the Tax Cuts and Jobs Act and incorporation into US tax treaties. They will also examine how recent practices reflect conflicting interpretations of this principle and why the role of realistic alternatives in transfer pricing cases is not as straightforward as it might first appear.
Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (September 10)
During this Thought Center Webcast, Ernst & Young professionals will discuss about operating the tax function in this time of National Emergency created by the COVID-19 virus.
Recent Tax Alerts
— Aug 19: Malaysia announces multiple immigration policy changes (Tax Alert 2021-1534)
— Aug 16: New Indonesia–Singapore tax treaty enters into force (Tax Alert 2021-1522)
Canada & Latin America
— Aug 19: Uruguay's Tax Authority issues new form for the affidavit of corporate income tax, net wealth tax and corporate control tax (Tax Alert 2021-1539)
— Aug 19: Peru creates a new tax-free zone (Tax Alert 2021-1537)
— Aug 19: Peru announces new immigration policies for Resident Visa and Temporary Visa holders (Tax Alert 2021-1535)
— Aug 13: Colombia's highest tax court annuls official opinion that denied deductibility of interest on loans used to acquire shares (Tax Alert 2021-1512)
— Aug 18: Gibraltar announces increase in corporate tax rate applies to profits from 1 August 2021 (Tax Alert 2021-1533)
— Aug 18: OECD releases Latvia Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-1530)
— Aug 13: UK issues updated Plastic Packaging Tax guidance for business (Tax Alert 2021-1511)
— Aug 16: Turkey publishes Ultimate Beneficial Owner Declaration Form (Tax Alert 2021-1516)
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.