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January 16, 2022
2022-0075

U.S. Tax This Week for January 14

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 14 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

Foreign tax credit regulations revamp creditability rules for foreign income taxes and include several other key changes

On 4 January 2022, the United States (US) Treasury Department published its third set of final regulations (T.D. 9959, the Final Regulations) on foreign tax credits since the enactment of the Tax Cuts and Jobs Act (TCJA). The Final Regulations adopt proposed regulations that were published on 12 November 2020 (the Proposed Regulations), with some modifications. EY Tax Alert 2022-0040 has details.

Final rules address tax consequences of transitioning from the use of LIBOR and other interbank offered rates in certain financial contracts

In final regulations (TD 9961) (the Final Regulations) released December 30, 2021, the Treasury Department provided guidance on the elimination of, and pending transition from, the use of certain interbank offered rates (IBOR), including the London interbank offered rate (LIBOR), in certain financial contracts, including debt instruments, derivatives and other contracts. The Final Regulations address whether a modification of the terms of a contract to replace an existing IBOR with a new reference rate results in a taxable event and the realization of income, deduction, gain, or loss. EY Tax Alert 2022-0037 has details.

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EY Guides and Publications

What the November 2021 elections may mean for state tax policy in 2022
EY's Scott Roberti, Managing Director and Leader, Indirect, State Policy Services, outlines what impact the November 2, 2021 elections may have on 2022 state tax policy in this new article.

Realizing the value of your tax and finance function
EY's 2022 Tax and Finance Operations Survey, Realizing the value of your tax and finance function, highlights how businesses are actively transforming to meet today's largest challenges, including the impact of COVID-19, shifting workforce dynamics, environmental, social and governance impacts on long-term value and more.

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Upcoming Webcasts

BEPS 2.0: Focus on Pillar Two (January 14)
During this EY Webcast, Ernst & Young professionals 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.

Supply chain and tax challenges for manufacturers in Mexico (January 19)
The global economy is undergoing significant supply chain disruption, creating new challenges for multinationals with manufacturing operations in Mexico. Mexico’s 2022 tax reform could also affect these manufacturers. As such, companies may wish to explore manufacturing alternatives in Mexico that could yield new operating and tax efficiencies. During this EY Webcast, Ernst & Young professionals will address these issues.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (January 21)
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.

How the UK AHC regime will impact the alternative investment funds landscape (January 24)
Please join our panel of professionals for our webcast – a timely discussion of recent Tax industry trends and the outlook for changes relevant to US-based asset managers.

EY Tax.Tech™ webcast series: Understanding the future of tax - - the intelligent finance and tax function (January 25)
During this EY Webcast, Ernst & Young professionals will give a view into the workings of the new intelligent finance and tax function. They’ll explore issues ranging from the operating model necessary to underpin this integrated approach to the advanced technology platform and common data framework flowing through the complete finance and tax process life cycle.

BorderCrossings . . . With EY transfer pricing and tax professionals (January 27)
Multinational companies often encounter related transactions – for example, the sale of tangible goods with the use of intangibles, or the sale of goods along with services being provided. This month’s BorderCrossings webcast addresses these issues by focusing on the related “aggregation principle” in transfer pricing. The webcast will also include a brief update on recent activities around the OECD’s “Pillar One” and “Pillar Two” initiatives under BEPS 2.0.

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Recent Tax Alerts

Internal Revenue Service

— Jan 13: IRS TE/GE issues FY 2021 report on compliance activities of Exempt Organization function (Tax Alert 2022-0073)

— Jan 11: IRS extends compliance deadlines for low-income housing and qualified residential projects (Tax Alert 2022-0060)

— Jan 10: IRS updates exemption application procedures, including electronic filing for Form 1024 (Tax Alert 2022-0039)

— Jan 07: IRS rules that US corporation can integrate foreign currency hedges in connection with acquiring a publicly traded foreign corporation (Tax Alert 2022-0035)

— Jan 07: January 30, 2022 | Deadline for REIT shareholder demand letters (Tax Alert 2022-0034)

International

— Jan 13: Argentina's tax authority launches the 'Comprehensive System for Monitoring Payments Abroad for Services' (Tax Alert 2022-0070)

— Jan 12: Double tax treaty between Colombia and France entered into force on January 1, 2022 (Tax Alert 2022-0068)

— Jan 12: Spain approves State Budget Bill for 2022 (Tax Alert 2022-0066)

— Jan 12: China implements new, stricter pre-travel COVID-19 test requirements for inbound travelers (Tax Alert 2022-0065)

— Jan 12: Costa Rican Foreign Trade Promoter published the 'Handbook for Auditing Free Trade Zone Regime Companies' (Tax Alert 2022-0062)

— Jan 12: President Biden signs Uyghur Forced Labor Prevention Act with implications for US importers (Tax Alert 2022-0059)

— Jan 12: Kenya High Court rules that insurance agencies, insurance brokerage and securities brokerage services should remain as VAT-exempt (Tax Alert 2022-0058)

— Jan 10: Colombia issues resolution on ultimate beneficial owners (Tax Alert 2022-0052)

— Jan 11: Kazakhstan's VAT obligations for nonresidents engaged in the e-commerce sale of goods and providing digital services to individuals entered into force on 1 January 2022 (Tax Alert 2022-0051)

— Jan 11: Cyprus expands treaty network as of 1 January 2022 (Tax Alert 2022-0050)

— Jan 10: Costa Rica's Congress will discuss a bill that would modify PE definition (Tax Alert 2022-0047)

— Jan 10: Russia implements new medical exam, photo and fingerprint requirement for foreign travelers (Tax Alert 2022-0046)

— Jan 10: Canada announces temporary expanded eligibility for the Local Lockdown Program (Tax Alert 2022-0045)

— Jan 07: Paraguay modifies nonresident tax for digital services (Tax Alert 2022-0038)

— Jan 07: Ghana enacts various tax amendments introduced in 2022 Budget (Tax Alert 2022-0032)

Legislation

— Jan 12: Updated EY publication includes income tax law changes enacted at the close of Q4 2021 (Tax Alert 2022-0067)

— Jan 12: What to expect in Washington (January 12) (Tax Alert 2022-0061)

— Jan 11: Biden Administration issues FAQs requiring insurance companies and group health plans to cover the cost of at-home COVID-19 tests (Tax Alert 2022-0055)

— Jan 10: QUEST Economic Update highlights key US and global economic trends January 10, 2022 (Tax Alert 2022-0048)

States

— Jan 13: Sales and Use Tax Quarterly Update for first quarter of 2022 (Tax Alert 2022-0074)

— Jan 13: Oregon extends family leave to employees returning from layoff or termination (Tax Alert 2022-0071)

— Jan 12: Ohio Department of Taxation issues updated school district income tax rates for 2022 and revised state income tax withholding guidelines (Tax Alert 2022-0064)

— Jan 11: Maryland law allows counties to raise their income tax rates and apply income tax brackets; 2022 county income tax rates now available (Tax Alert 2022-0056)

— Jan 07: San Francisco and Los Angeles have upcoming business tax filing deadlines (Tax Alert 2022-0036)

— Jan 07: Preliminary state unemployment insurance tax facts for 2022 (as of January 6, 2022) (Tax Alert 2022-0033)

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Legislation

  • Biden Administration’s Build Back Better legislation stalls in Congress; Senate Finance Committee releases updated international tax provisions

IRS news

  • Treasury releases final foreign tax credit regulations
  • IRS issues final rules on tax consequences of transition from LIBOR and other interbank offered rates in certain financial contracts
  • FinCEN again extends certain signature authority reporting (FBAR, Form 114) over foreign financial accounts

OECD news

  • OECD releases Model Rules on Pillar Two Global Minimum Tax
  • OECD releases 2020 peer review report on BEPS Action 5 on the Exchange of Information of Tax Rulings

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2022-03Internal Revenue Bulletin of January 14, 2022

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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