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October 31, 2021
2021-1975

U.S. Tax This Week for October 29

Ernst & Young's U.S. Tax This Week newsletter for the week ending October 29 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.

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Top of the Week

President Biden releases new framework on $1.75 trillion package

On October 28, President Joe Biden announced a new framework outlining the Democrats' $1.75 trillion social spending package. The package includes funding for expanded health coverage, affordable housing, universal pre-kindergarten and child care, clean energy and climate investments, along with other items. "After hearing input from all sides and negotiating in good faith with Senators Manchin and Sinema, Congressional Leadership, and a broad swath of Members of Congress, President Biden is announcing a framework for the Build Back Better Act," stated a White House press release. "President Biden is confident this is a framework that can pass both houses of Congress, and he looks forward to signing it into law. He calls on Congress to take up this historic bill — in addition to the Bipartisan Infrastructure Investment and Jobs Act — as quickly as possible." EY Tax Alert 2021-9025 has details.

Six-country Joint Statement on transitional approach to existing unilateral measures during period before Pillar One is in effect

On 21 October 2021, a Joint Statement from Austria, France, Italy, Spain, the United Kingdom (UK) and the United States (US) was released describing a compromise reached by the countries on a transitional approach to the treatment of existing digital services taxes (DSTs) and other relevant similar measures during the interim period before new Pillar One rules come into effect. Under the compromise, the five European countries, which are not required to withdraw their existing DST regimes until Pillar One takes effect, have agreed to allow a portion of taxes accrued by a multinational enterprise (MNE) under their DSTs or any other unilateral measures before Pillar One takes effect to be credited against the MNE's future Pillar One Amount A tax liability when Pillar One rules are in effect. The US has agreed to terminate its proposed trade actions against the five countries with respect to their existing DSTs and commits not to impose further trade actions with respect to such countries and their DSTs during this interim period. Finally, the six countries are to remain in close contact to ensure there is a common understanding of the agreement and to endeavor to resolve any differences of view. EY Tax Alert 2021-1945 has details.

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Upcoming Webcasts

The indirect tax technology journey: Now. Next. Beyond (November 3)
During this EY Webcast, Ernst & Young professionals will share insights into how market-leading organizations are using technology to adapt to new legislation and market trends, and to effectively transform tax operations.

Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments (November 5)
During this EY Webcast, Ernst & Young professionals will discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change. Panelists will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.

International tax talk quarterly series with the EY Global Tax Desk Network (November 9)
During this EY Webcast, panelists from Europe, Latin America and the Asia-Pacific region, will discuss the following: (i) Recent EU tax legislative changes affecting intragroup transactions and holding, financing and intellectual property arrangements; (ii) Key changes under the proposed Latin-America tax reform in Brazil and Mexico; (iii) Trends, developments and the potential impact of global tax reform in the Asia-Pacific region; and (iv) Foreign tax considerations in preparing for proposed US legislative changes, with a focus on developments that may require action by December 31, 2021.

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Recent Tax Alerts

Internal Revenue Service

— Oct 28: IRS further extends filing and payment deadlines for parts of Mississippi affected by Hurricane Ida (Tax Alert 2021-1958)

— Oct 26: IRS revises Forms W-8ECI, W-8BEN-E, W-8BEN (Tax Alert 2021-1953)

— Oct 26: IRS establishes standards for LLCs to receive exemption under IRC Section 501(c)(3) (Tax Alert 2021-1952)

— Oct 22: IRS rules that normalization rules do not allow adjustment based on excess deferred income taxes without other adjustments to rate base (Tax Alert 2021-1928)

International

— Oct 28: Argentine Government extends the promotional regime for industrial entities located in Tierra del Fuego, Antarctica and Southern Atlantic Islands (Tax Alert 2021-1974)

— Oct 28: Indian tax authorities may be preparing to enforce GST and EL compliance on payments to US universities for online courses (Tax Alert 2021-1973)

— Oct 28: Paraguayan tax authority issues new transfer pricing rules (Tax Alert 2021-1972)

— Oct 28: UK Chancellor delivers second Budget of 2021 (Tax Alert 2021-1971)

— Oct 28: India implements new policies for inbound travelers (Tax Alert 2021-1970)

— Oct 28: Paraguayan Government modifies transfer pricing provisions related to the exportation of certain commodities (Tax Alert 2021-1969)

— Oct 28: Nigeria issues list of approved COVID-19 vaccines; removes Brazil, South Africa and Turkey from red list (Tax Alert 2021-1968)

— Oct 28: China implements new requirements for Official Invitation (PU) letters sponsored by companies based in Beijing (Tax Alert 2021-1967)

— Oct 28: OECD releases Brazil Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-1965)

— Oct 28: Ghana Revenue Authority issues Practice Notes on certain provisions of the VAT Act (Tax Alert 2021-1964)

— Oct 28: Italy issues Law Decree with urgent tax measures including voluntary disclosure for R&D tax credit (Tax Alert 2021-1962)

— Oct 27: OECD releases People’s Republic of China Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-1960)

— Oct 27: Italian Government approves 2022 Budget document and proposes postponement of Italy's Sugar Tax and Plastic Tax to 2023 (Tax Alert 2021-1959)

— Oct 26: US issues Presidential Proclamation regarding new air travel rules (Tax Alert 2021-1951)

— Oct 26: Nigeria implements new, updated policies for inbound travelers (Tax Alert 2021-1950)

— Oct 26: Portugal proposes changes to VAT law (Tax Alert 2021-1948)

— Oct 25: Costa Rica's Ministry of Finance increases taxes on packaged non-alcoholic beverages and 'toilet' soap (Tax Alert 2021-1943)

— Oct 25: Costa Rica's Economic Affairs Commission of the Legislative Assembly approves reform of General Customs Law (Tax Alert 2021-1942)

— Oct 26: Kenya | Action required for LIBOR transition (Tax Alert 2021-1941)

— Oct 25: OECD releases outcomes of fourth phase of peer reviews on BEPS Action 13 (Tax Alert 2021-1939)

— Oct 25: OECD releases seventh batch of Stage 2 peer review reports on dispute resolution (Tax Alert 2021-1938)

— Oct 25: United Nations launches MAP and Tax Dispute Resolution Handbook (Tax Alert 2021-1932)

— Oct 25: Italy issues Law Decree on new patent box regime (Tax Alert 2021-1929)

— Oct 22: Peruvian Tax Court establishes guidelines that entities must meet to qualify as beneficial owners under Peru-Chile income tax treaty (Tax Alert 2021-1927)

— Oct 22: Thailand publishes mandatory requirements for Thai transfer pricing documentation (Tax Alert 2021-1923)

Legislation

— Oct 28: House Energy and Commerce hearing on legislation to support patients, caregivers and providers (Tax Alert 2021-1966)

— Oct 27: What to expect in Washington (October 27) (Tax Alert 2021-1957)

— Oct 27: Sens. Wyden, Warren, King unveil minimum tax on corporate profits (Tax Alert 2021-1956)

States

— Oct 27: Rhode Island delays computation of 2022 SUI tax rates; relief of COVID-19 benefits charges to employer accounts extended (Tax Alert 2021-1961)

— Oct 26: Tennessee law will lower maximum weeks of unemployment insurance benefits available to claimants (Tax Alert 2021-1949)

— Oct 25: District of Columbia extends temporary COVID-19 paid sick and family leave provisions through November 5, 2021 (Tax Alert 2021-1944)

— Oct 25: Oregon Workers' Benefit Fund assessment unchanged for 2022 (Tax Alert 2021-1926)

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Recent Newsletters

State and Local Tax Weekly

   Highlights of this edition include:

— Texas adopts amendments to its franchise tax rule for credits for research and development activities On Oct. 4, 2021, the Texas Comptroller of Public Accounts (TX Comptroller) filed with the Texas Secretary of State the final amendments to its franchise tax rule,34 Tex. Admin. Code § 3.599 (Section 3.599), regarding the tax credit for research and development (R&D) activities.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Value Added Tax, Unclaimed Property

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IRS Weekly Wrap-Up

Notices

 2021-56Standards for Section 501(c)(3) Status of Limited Liability Companies

Internal Revenue Bulletin

 2021-43Internal Revenue Bulletin of October 25, 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.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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