December 12, 2021
U.S. International Tax This Week for December 10
Ernst & Young's U.S. International Tax This Week newsletter for the week ending December 10 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.
Senate Majority Leader Chuck Schumer said on the Senate floor on 9 December that Democratic meetings with the Senate Parliamentarian have concluded with regard to the proposed Build Back Better Act (H.R. 5376) and bipartisan “Byrd bath” meetings, “where both sides are together and make their case to the parliamentarian and argue back and forth” are expected to begin next week. (The so-called “Byrd bath” process is formal review by the Senate Parliamentarian during which Democrats and Republicans argue whether proposed provisions meet budget reconciliation rules and may be included in the bill.) This could put the bill on the Senate floor the week of 20 December, although there are members, including Senators Joe Manchin and Kyrsten Sinema who believe consideration will extend into January. The Majority leader earlier said that the Build Back Better Act budget reconciliation bill had to be completed before the end of 2021 because expanded Child Tax Credit payments expire at the end of December and must “continue uninterrupted.”
The Senate Finance Committee reportedly will release its piece of the proposed Build Back Better Act sometime today (10 December), albeit not a final draft. Committee Chairman Ron Wyden was quoted as saying the committee document would include both technical and substantive changes. The Chairman added that “negotiations are going to continue because there are still some outstanding issues,” including discussions related to the State and Local Taxation cap, among other provisions.
A senior Treasury official this week also commented on international tax regulatory guidance that will follow enactment of the Build Back Better Act. The official noted that there are few proposed international provisions that will take effect in 2022 – for example, related to the Base Erosion and Anti-abuse Tax and foreign tax credit changes – and those would be the first to be addressed. The official was quoted as saying that ideally the US would like to issue proposed regulations, and finalize those regulations within 18 months. Provisions in the Act with delayed applicability date would allow time for stakeholder input.
Turning to treaty developments, 18 Republican members of the Senate Foreign Relations Committee on 7 December sent a letter to the Chairman and Ranking Member of the committee urging the committee to hold a vote on the proposed 2010 US-Chile income tax treaty. The treaty has been stalled in committee for nearly 12 years and repeatedly stymied by Senator Rand Paul, who has blocked consideration of a number of pending US tax treaties – including the Chilean accord — due to privacy concerns. The senators wrote, “Without ratification of the Treaty, Chilean tax rates are due to increase on U.S. companies' Chilean operations and could reach a rate of 44.45 percent.”
Treasury’s Financial Crimes Enforcement Network (FINCEN) on 8 December published proposed regulations that would require certain entities to file reports with FinCEN regarding beneficial ownership, as required by the Corporate Transparency Act, which was enacted in January 2021. The purpose of the information reporting is to “help prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity.” The proposed regulations address who must file, when they must file, and what information they must provide to the US.
Implications of the Superfund chemicals excise tax (December 13)
During this EY Webcast, Ernst & Young professionals will discuss the recently enacted Infrastructure Investment and Jobs Act, specifically the reinstatement and expansion of the Superfund chemicals excise tax.
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.
Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (December 17)
During this EY Webcast, Ernst & Young panelists will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.
BEPS 2.0: Focus on Pillar Two (December 21)
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.
Private Equity and Private Capital - Navigating transformative global and US legislative change (January 18)
During this EY Webcast, Ernst & Young professionals will discuss recent global private equity (PE) industry trends and the outlook for US and international legislative and regulatory changes relevant to PE and alternative funds, transactions and portfolio companies.
Recent Tax Alerts
— Dec 06: 2021 holiday travel guide for the United States (Tax Alert 2021-2197)
— Dec 09: Taiwan and UK sign protocol to amend tax treaty (Tax Alert 2021-2214)
— Dec 09: Taiwan's tax treaty with Saudi Arabia enters into force (Tax Alert 2021-2213)
— Dec 03: South Korea temporarily suspends quarantine exemptions for certain travelers and announces new restrictions for travelers from nine African countries (Tax Alert 2021-2186)
Canada & Latin America
— Dec 08: Canadian employer obligation on deemed supplies made to pension and master pension entities discussed (Tax Alert 2021-2208)
— Dec 08: Supreme Court of Canada dismisses Crown's appeal in The Queen v. Loblaw Financial Holdings Inc. (Tax Alert 2021-2207)
— Dec 07: Mexico City's 2022 economic proposal includes the imposition of new taxes on certain digital services (Tax Alert 2021-2205)
— Dec 07: Colombia and Uruguay sign double tax treaty (Tax Alert 2021-2203)
— Dec 07: Portugal modifies transfer pricing regime (Tax Alert 2021-2204)
— Dec 07: UK's imminent December deadline for VAT refund claims for non-registered and non-established EU and non-EU businesses discussed (Tax Alert 2021-2200)
Highlights of this edition include:
- House passes Build Back Better Act budget reconciliation bill; action moves to Senate
- President Biden signs infrastructure legislation including new cryptocurrency reporting
- Final FTC regs expected by year-end, PTEP regs in 2022
- New IRS tool supports withholding agents’ compliance with Form 1042-S
- OECD remains committed to BEPS Pillars in effect by end of 2023
- US, Turkey announce joint statement on unilateral digital tax compromise
- India, US agree on transitional approach for 2% Equalization Levy prior to implementation of Pillar One rule
- OECD releases 2020 MAP statistics and awards
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2021-50||Internal Revenue Bulletin of December 13, 2021|
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:
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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.