March 13, 2022
U.S. International Tax This Week for March 11
Ernst & Young's U.S. Tax This Week newsletter for the week ending March 11 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.
Congress this week passed a long-negotiated $1.5 trillion, 2,741-page omnibus appropriations bill that does not include a tax title, meaning it does not address any tax extenders or Tax Cuts and Jobs Act cliffs. The spending bill will fund the federal government through the remainder of FY2022. The legislation, which now goes to President Biden for his signature, passed the Senate on 10 March and the House earlier in the week. Senate Finance Committee Chairman Ron Wyden had said there likely would not be a tax section in the Omnibus bill because some Democrats did not want to act on corporate tax provisions without items for individuals such as extending the expanded Child Tax Credit with monthly payments.
With regard to a post-Build Back Better Act reconciliation bill and other aspects of the congressional agenda, Senate Majority Leader Chuck Schumer released a letter on 7 March, saying that during March and April, "many Senate committees will hold new hearings and mark-ups on Democrats' cost-cutting proposals." With regard to reconciliation specifically, the Majority Leader wrote that "Senate Democrats have introduced additional legislative proposals to lower the rising cost of energy, prescription drugs and health care, and the costs of raising a family." The letter was seen by some as the first signal by Senate Democrats that they plan to bring forward a social spending and climate reconciliation package that is more in line with recent statements by Senator Joe Manchin.
A Treasury official this week confirmed that the US is committed to releasing long-awaited proposed previously-taxed earnings and profits (PTEP) regulations in 2022 that will address multiple areas, but that taxpayers should not expect their release until the latter half of the year. An Internal Revenue Service (IRS) official was also quoted this week as saying, however, that the coming PTEP regulations would not include rules on capital accounts "especially as [they] relate to GILTI."
An IRS official provided some insight this week into the December 2021 final foreign tax credit regulations. The official was quoted as saying that in a situation where a foreign jurisdiction divides a royalty into two parts based on payor location and the location of the use of the intellectual property, withholding tax on the portion based on the payor location may not be eligible for a US foreign tax credit. The IRS official said in this situation, no foreign tax credit would be available because the payor jurisdiction designation is not reasonably similar to US rules and does not meet the final regulations' attribution requirement.
Transparency in the sharing economy: What to know about DAC7 and beyond (March 24)
During this EY Webcast, Ernst & Young professionals will discuss the global adoption of tax reporting rules for digital platforms, including OECD’s Model Rules, EU’s tax automatic exchange of information directive known as DAC7 and the UK’s hybrid implementation.
Recent Tax Alerts
— Mar 09: US bans imports of Russia energy products; bans exports of oil refinery equipment to Russia (Tax Alert 2022-0394)
— Mar 04: USCIS decouples adjudication of applications for Employment Authorization and Advance Parole travel documents to address backlog (Tax Alert 2022-0373)
— Mar 04: US designates Ukraine for Temporary Protected Status for eighteen months (Tax Alert 2022-0372)
Canada & Latin America
— Mar 10: Peru's President amends the Tax Code (Tax Alert 2022-0403)
— Mar 09: Canada releases proposed EIFEL rules (Tax Alert 2022-0391)
— Mar 08: Costa Rica proposes allowing corporations to pay annual tax owed for tax years 2016 through 2021 on legal entities without paying interest and penalties (Tax Alert 2022-0386)
— Mar 08: Canada announces new immigration measures to support those impacted by the Ukrainian crisis (Tax Alert 2022-0385)
— Mar 08: Peru's President amends law regulating use of Peruvian banking system for tax purposes (Tax Alert 2022-0384)
— Mar 04: Mexican input VAT may no longer be creditable for activities performed outside Mexico - action required by March 10 (Tax Alert 2022-0370)
— Mar 04: Yukon budget 2022-23 discussed (Tax Alert 2022-0366)
— Mar 04: Canada imposes new sanctions on Russia, ceases issuance of export permits for exports of goods to Russia (Tax Alert 2022-0365)
— Mar 10: Italian Tax Authorities issue implementing instructions for new patent box regime (Tax Alert 2022-0401)
— Mar 09: Italy revamps opportunity to tax step-up participations and land (Tax Alert 2022-0393)
— Mar 07: CJEU holds that customer recharge of costs of repair of goods under warranty to its supplier may be deemed consideration for supply by the customer (Tax Alert 2022-0379)
— Mar 07: Bahrain introduces Golden Residence Permits (Tax Alert 2022-0380)
— Mar 09: New Zealand delays introduction of proposed changes to GST invoicing requirements (Tax Alert 2022-0387)
— Mar 10: PE Watch | Latest developments and trends, March 2022 (Tax Alert 2022-0397)
— Mar 09: Colombia and the Netherlands sign double tax treaty (Tax Alert 2022-0396)
Highlights of this edition include:
- G20 confirms BEPS 2.0 ambitious timeline; Republican Senators voice concerns
Treasury and IRS news
- IRS releases FAQs on Schedules K-2 and K-3 transition relief
- Treasury official briefs Senators on future cryptocurrency reporting regulations
- OECD releases Pillar One public consultation document on draft nexus and revenue sourcing rules
- OECD releases Pillar One public consultation document on draft rules for tax base determinations
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.