taxnews.ey.comPrint

20 March 2022

U.S. International Tax This Week for March 18

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 18 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.

—————————————————————————
Spotlight

The Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on 14 March released a commentary document on the BEPS 2.0 Pillar Two global minimum tax rules (GloBE Rules), providing detailed guidance on the operation of these rules. The commentary is 228 pages long and is accompanied by 50 pages of examples that address a host of issues. Among them, the commentary reconfirmed that there could be a top-up tax allocable under the Undertaxed Payments Rule (UTPR) when domestic income earned by a company in its headquarter jurisdiction has an effective tax rate as computed under the Pillar Two model rules that is below 15%. This is an outcome that has raised concerns among many US companies that avail themselves of incentives and credits that are not qualified refundable credits as defined in the model rules under Pillar Two. In effect, this could mean that a top-up tax may be payable in other jurisdictions because certain credits and incentives were utilized in the US.

The Organisation for Economic Co-operation and Development (OECD) indicated that the next step in regard to the GloBE Rules will be development of the Implementation Framework, "as agreed under the Detailed Implementation Plan set out in the October Statement." Inclusive Framework members are seeking public input on the issues by 11 April. The public consultation is meant to focus on "mechanisms that will ensure tax administrations and MNEs can implement and apply the GloBE Rules in a consistent and co-ordinated manner" while minimizing compliance costs.

Senate Finance Committee Chairman Ron Wyden recently issued a press release indicating he supports putting Russia and Belarus on the list of countries subject to IRC Section 901(j) sanctions. IRC Section 901(j) eliminates the preferential 10.5% GILTI (global intangible low-taxed income) tax rate and disallows foreign tax credits for income earned in countries that support terrorism or without US diplomatic relations. Chairman Wyden's proposal would put countries that are participating in or materially support the invasion of Ukraine on the list of countries subject to the sanction. This latest proposal follows President Biden's revocation of most favored nation status for Russia and some talk on Capitol Hill of terminating the US-Russia tax treaty.

An Internal Revenue Service (IRS) official this week recommended that taxpayers should always request being under the new fast-track private letter ruling (PLR) process that was announced in January 2022 in Revenue Procedure 2022-10, saying there is no down-side. The IRS instituted the 18-month pilot program to address corporate PLR requests, with a target completion of 12 weeks from assignment to an agency review team.

—————————————————————————
EY Guides and Publications

How BEPS 2.0 could impact the alternative investment fund (AIF) industry
The Organisation for Economic Co-operation and Development/G20 Inclusive Framework on BEPS 2.0 project continues to move forward. An article outlines the potential implications of these rules for asset managers and their portfolio companies.

—————————————————————————
Upcoming Webcasts

BEPS 2.0: Implications of Pillar Two for businesses (March 22)
During this EY Webcast, Ernst & Young professionals will walk through practical examples illustrating the potential effects of core elements of the Model Rules. They also will provide an update on ongoing technical developments in the Inclusive Framework and share perspectives on the plans of some key jurisdictions for moving forward with the global minimum tax.

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.

17th Annual International Tax Quantitative and Reporting Conference (March 28 & 29)
The 17th Annual International Tax Quantitative and Reporting Conference will continue to explore in detail the considerations associated with international tax reporting and quantitative analysis related to today’s ever-changing environment, including US legislative developments, international initiatives and regulatory changes. Key topics will include the recently released foreign tax credit regulations, BEPS, the Build Back Better Act (and potential subsequent legislation) and significant changes to US international reporting requirements for 2021 tax years. Register here.

—————————————————————————
Recent Tax Alerts

United States

Asia

Canada & Latin America

Europe

Oceania

—————————————————————————
IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2022-12Internal Revenue Bulletin of March 21, 2022

—————————————————————————
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: 2022-0441

 

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.

 

Copyright © 1996 – 2025, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement