U.S. International Tax This Week for November 24

24 November 2021

Ernst & Young's U.S. International Tax This Week newsletter for the week ending November 24 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.

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Spotlight

The US and Turkey issued a joint statement on 22 November announcing that the same terms in the Unilateral Measures Compromise reached in October 2021 among the US and five European countries with respect to digital services taxes (DSTs) and US trade actions, would also apply in the US-Turkey context.

On 21 October, a Joint Statement from Austria, France, Italy, Spain, the United Kingdom and the US was released describing a compromise reached by the countries on a transitional approach to the treatment of existing DSTs and other relevant similar measures during the interim period before new BEPS Pillar One rules come into effect. The interim period is the period beginning on 1 January 2022 and ending on the earlier of the date that the Pillar One multilateral convention comes into force or 31 December 2023.

Under the October compromise, the five European countries, and now Turkey, while 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 under their DSTs or any other unilateral measures before Pillar One takes effect to be credited against the portion of the corporate tax liability associated with Amount A as computed under Pillar One.

The US, in turn, agreed to terminate its proposed trade actions against the countries with respect to the existing DSTs and committed not to impose further trade actions with respect to such countries and their DSTs during this interim period.

G20 leaders’ endorsement at the end of October 2021 of the Inclusive Framework agreement on key parameters of the BEPS 2.0 project is requiring swift action to ensure that the new rules come into effect globally as soon as possible. Grace Perez-Navarro, deputy director of the OECD's Center for Tax Policy and Administration, on 18 November was quoted as saying the OECD is committed to having both BEPS Pillars in effect by the end of 2023. The OECD official said this will require the Pillar One multilateral convention to be completed by mid-2022.

Earlier, officials said model rules on the BEPS Pillar Two 15% global minimum tax framework were expected to be released by the end of November. Global minimum tax legislation is already pending in in the US Congress in the proposed Build Back Better Act, and work has begun on a European Union directive on global minimum tax rules.

The House and Senate are out of session this week for the Thanksgiving holiday. The Senate is expected to turn to the proposed House-passed Build Back Better Act sometime after it reconvenes following the holiday.

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Upcoming Webcasts

Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments (December 3)
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.

Global Withholding Tax Reporting (December 8)
During this live EY Webcast, Ernst & Young professionals will discuss recent global withholding tax reporting industry trends, developments, and outlook. We look forward to your participation for what will be an insightful discussion on cross-border investing and updates from the US, Latin America, and Europe.

BEPS 2.0: Focus on Pillar Two (December 14)
This EY webcast continues the series of EY Global webcasts addressing BEPS 2.0 developments. Please join us for a timely discussion of the Pillar Two model rules scheduled to be released at the end of November. Panelists will discuss the key elements of the Pillar Two model rules, highlighting what is new with this latest release. They also will share perspectives on how the European Union and other jurisdictions plan to incorporate these model rules into domestic law.

Tax aspects of the LIBOR transition: What to consider for year-end (December 16)
In this EY webcast, panelists 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.

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Recent Tax Alerts

United States

— Nov 24: USCIS conducts third random selection from previously submitted FY 2022 H-1B Cap registrations (Tax Alert 2021-2144)

— Nov 24: USCIS announces significant changes to rules relating to employment authorization for certain H-4, E, and L non-immigrant dependent spouses (Tax Alert 2021-2145)

Africa

— Nov 19: Ghana issues Budget Statement and Economic Policy for 2022 Financial Year (Tax Alert 2021-2123)

Asia

— Nov 24: Thailand amends Revenue Code to facilitate international exchange of tax information (Tax Alert 2021-2141)

— Nov 19: Taiwan approves amendments to rules impacting Recruitment and Employment of Foreign Professionals (Tax Alert 2021-2121)

Canada & Latin America

— Nov 23: New Manitoba Provincial Sales Tax registration requirements for nonresidents in digital economy discussed (Tax Alert 2021-2134)

Europe

— Nov 24: Netherlands withdraws recently announced changes to the taxation of employee stock options (Tax Alert 2021-2143)

— Nov 24: Cyprus further extends non-application of administrative fines for DAC6 submissions until 31 January 2022 and issues circular on DAC6 penalties (Tax Alert 2021-2140)

— Nov 23: Italy issues draft guidance on hybrid mismatches (Tax Alert 2021-2136)

— Nov 19: Polish President signs major tax reform “Polish Order” (Tax Alert 2021-2124)

— Nov 19: UK's Finance Bill 2021-22 includes proposed legislation for notification by large businesses of uncertain tax treatments (Tax Alert 2021-2122)

Middle East

— Nov 23: Turkey publishes draft Communiqué regarding electronic documents (Tax Alert 2021-2132)

Oceania

— Nov 23: Australia’s Foreign Investment Review Board announces cut-off for end of year processing (Tax Alert 2021-2135)

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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:

— 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.

Document ID: 2021-2146