February 13, 2022
U.S. International Tax This Week for February 11
Ernst & Young's U.S. International Tax This Week newsletter for the week ending February 11 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.
There was little movement this week in Washington with regard to a new social spending, climate and tax bill, as Congress turned to other priorities. Senator Joe Manchin indirectly addressed the subject of a pared down spending bill following a high inflation report that was released on 10 February. Senator Manchin said: "the threat of inflation is real" and the US should "get serious about the finances of our country. … It's time we start acting like stewards of our economy and the money the American people entrust their government with."
Other moderate Senate Democrats are acknowledging that ongoing inflation will affect the scale of any social spending bill.Senator Tim Kaine said the latest inflation numbers will limit the size of any proposals and predicted they will focus on lowering the cost of living, pointing to a proposal to allow Medicare to negotiate prescription drug prices, expanded access to child care and pre-K and workforce development funding. "I think it [a social spending bill] will pass in a pared-down version," Senator Kaine said.
With Congress focused on addressing US competitiveness legislation and electoral college reform, attention next will turn to President Biden's 1 March State of the Union Address for clues on how the Administration proposes to move forward.
At the same time, however, there are increasing signs of pressure on Congress to act on year-end 2021 tax changes, many of which were addressed in the now-stalled Build Back Better Act (BBBA). These include energy tax extenders and the Tax Cuts and Jobs Act (TCJA) IRC Section 174 requirement that research and development expenses be amortized over five years rather than expensed. Another TCJA cliff that was not in the BBBA that some congressional Republicans are insistent must move forward is renewal of the IRC Section 163(j) 30% of adjusted taxable income limitation on the deduction of interest expense calculated taking into account EBITDA (earnings before interest, taxes, depreciation, and amortization).
Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (February 18)
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.
BorderCrossings (February 24)
During this EY webcast, part of an ongoing monthly series, EY transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.
The indirect tax technology journey - Now. Next. Beyond. (March 2)
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.
Recent Tax Alerts
— Feb 04: Ghana Revenue Authority issues administrative guidelines on certain provisions of the VAT Amendment Act (Tax Alert 2022-0212)
— Feb 08: Indian Government releases restrictive interpretation of Most Favored Nation clause (Tax Alert 2022-0224)
Canada & Latin America
— Feb 10: Curaçao releases new guidance on innovation box regime (Tax Alert 2022-0241)
— Feb 09: Canada's Department of Finance releases draft legislation for 2021 budget measures (Tax Alert 2022-0231)
— Feb 04: Chile enacts tax reform to fund pension reform (Tax Alert 2022-0216)
— Feb 10: PE Watch | Latest developments and trends, February 2022 (Tax Alert 2022-0240)
— Feb 04: Cyprus Tax Authorities publish 10-year government bond yield rates for NID purposes (Tax Alert 2022-0211)
— Feb 08: Australia reopens international border from February 21 (Tax Alert 2022-0227)
Highlights of this edition include:
- Biden Administration looks to scaled- back Build Back Better legislation IRS news
Treasury and IRS news
- Final regulations treat domestic partnerships as aggregates for applying certain subpart F provisions, and proposed regulations would apply a similar approach to PFICs
- IRS changes to instructions for 2021 partnership Schedules K-2 and K-3 relevant to many partnerships, including private equity and private capital funds
- IRS announces pilot fast-track program to resolve corporate letter ruling requests in 12 weeks
- BEPS 2.0 model rules commentary expected to be released soon
- OECD developing BEPS 2.0 Pillar Two corporate minimum tax implementation framework
- OECD publishes 2022 Transfer Pricing Guidelines
- OECD releases eighth batch of Stage 2 peer review reports on dispute resolution
IRS Weekly Wrap-Up
Internal Revenue Bulletin
|Internal Revenue Bulletin of February 14, 2022
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.