November 21, 2021
U.S. International Tax This Week for November 19
Ernst & Young's U.S. Tax This Week newsletter for the week ending November 19 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 signed the long-awaited Infrastructure Investment and Jobs Act (H.R. 3684) into law on 15 November, following passage in the House on 12 November and by the Senate last summer.
Attention in the House this week turned back to the over $1.6 trillion proposed Build Back Better Act (H.R. 5376) reconciliation bill, which the House passed on 19 November (220 to 213 vote), following numerous delays and missed deadlines. The House-passed Build Back Better Act (BBBA) includes significant changes to the international tax provisions of the Internal Revenue Code. These and other tax changes are generally intended to fund expanded social programs such as health coverage, affordable housing, universal pre-kindergarten and childcare, clean energy and climate investments, among other proposed spending provisions. Although largely consistent with the House Ways & Means Committee draft that was released on 13 September, the final House-passed BBBA contains many important changes to the proposed international tax provisions, such as updates to the effective dates to make proposals prospective only.
The BBBA now goes to the Senate, where consideration will begin after the Thanksgiving holiday and where it is expected to be modified. The House bill has already been shaped by the parameters set by Senators Joe Manchin and Kyrsten Sinema , reducing the size and scope of the bill and refocusing tax increases to pay for it away from rate increases and toward non-rate proposals such as a corporate minimum tax based on book income and a tax on stock buybacks, among other provisions. Senator Manchin earlier suggested that major changes are possible to the House version of the Build Back Better bill, saying: "They're working off the House bill. That's not going to be the bill I work off of."
Senate Majority Leader Chuck Schumer has indicated that he wants the Build Back Better bill to be approved by the Senate before the Christmas break.
With respect to Internal Revenue Service (IRS) activity, on 15 November the IRS launched a new online tool that is designed to support US withholding agents' compliance with reporting and withholding required with respect to IRS Form 1042-S (Foreign Person's U.S. Source Income Subject to Withholding). An IRS news release states that the tool performs a quality review of data before it is submitted to the IRS. An IRS tutorial is available on how to use the tool. According to the IRS, use of the tool is voluntary, "but the IRS will take into account a withholding agent's use of the tool when making enforcement and penalty determinations."
Also, the IRS recently requested comments on Revenue Procedure 2015-41, which provides guidance on advance pricing and mutual agreement applications and compliance. Comments are due by 10 January 2022.
Tax aspects of the LIBOR transition: What to consider for year-end (December 16)
During this EY Webcast, Ernst & Young professionals will discuss tax considerations of the London Interbank Offered Rate (LIBOR) transition and what steps multinational companies can take before the year-end to prevent disruption.
Recent Tax Alerts
— Nov 17: Tanzania issues regulations on VAT exemption management procedures (Tax Alert 2021-2099)
— Nov 12: Kenya Tax Appeal Tribunal rules on use of Transaction Value Method for customs valuation (Tax Alert 2021-2067)
— Nov 15: Asean Mobility Spotlight (November 10) (Tax Alert 2021-2085)
— Nov 15: Philippines proposes law imposing VAT on nonresident digital service providers (Tax Alert 2021-2084)
— Nov 12: Singapore provides update on Goods and Services Tax (Tax Alert 2021-2066)
Canada & Latin America
— Nov 12: Brazilian tax authority limits nonresident capital gains tax on the sale of Brazilian shares by a Portuguese investor to 15% (Tax Alert 2021-2076)
— Nov 12: Ecuador's National Assembly to discuss tax reform bill (Tax Alert 2021-2074)
— Nov 18: Austrian Ministry of Finance publishes draft bill to reduce Corporate Income Tax and introduce Carbon Tax (Tax Alert 2021-2114)
— Nov 18: UK | Review of the new Asset Holding Company regime (Tax Alert 2021-2113)
— Nov 16: Poland submits new draft law on the employment of foreigners to Parliament (Tax Alert 2021-2092)
— Nov 16: Belgium implements new tax regime for inbound taxpayers and researchers (Tax Alert 2021-2088)
— Nov 15: Ireland announces relaxed entry measures for Christmas period and reduced document requirements for citizenship applications (Tax Alert 2021-2086)
— Nov 12: PE Watch | Latest developments and trends, November 2021 (Tax Alert 2021-2068)
— Nov 12: European Parliament provides final approval needed for formal adoption of public CbCR Directive (Tax Alert 2021-2061)
— Nov 18: Israel implements new policies for international inbound travelers (Tax Alert 2021-2109)
— Nov 16: The Latest on BEPS and Beyond for November 2021 (Tax Alert 2021-2091)
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:
— 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.