May 1, 2022
U.S. International Tax This Week for April 29
Ernst & Young's U.S. International Tax This Week newsletter for the week ending April 29 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.
Congress returned to Washington this week from its spring recess with Democrats questioning whether limited budget reconciliation legislation is possible and, if so, what would be its parameters. Senator Joe Manchin has expressed some interest in a climate-focused reconciliation bill that also addresses tax changes and deficit reduction. Senator Manchin is now also separately holding meetings to explore whether some version of an energy bill could be enacted on a bipartisan basis, outside of the reconciliation process.
With regard to reconciliation, Senator Manchin offered some high-level clarity on 26 April when he outlined what he could support in terms of a scaled-back bill. Following a meeting with Senate Majority Leader Chuck Schumer, Senator Manchin was quoted as saying that any future budget reconciliation bill should be focused on reducing inflation, reducing the debt, and "getting a handle on what's going on." To that end, Senator Manchin indicated he supports changes to the tax code, including increasing the corporate tax rate to 25%, setting the capital gains rate at 28% and eliminating "loopholes" and "making sure everyone pays their fair share." The prospects for any budget deal, however, remain uncertain.
Although there reportedly are discussions taking place among the Biden Administration and Congressional Democrats, Senator Manchin indicated there are no ongoing formal reconciliation negotiations at the present time.
The Organisation for Economic Co-operation and Development (OECD) on 25 April held a public consultation meeting on the Implementation Framework for the BEPS 2.0 Pillar Two Global Anti-Base Erosion (GloBE) Rules. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) sought input on four questions that were outlined in the invitation, which was released on 14 March. The GloBE Rules and Commentary were released on the same day. The meeting focused on the mechanisms necessary to ensure that tax administrations and multinational enterprises can implement and apply the GloBE Rules in a consistent and coordinated manner. At the end of the session, the OECD Secretariat also addressed some technical questions related to the GloBE Rules.
According to the implementation plan released in October 2021, the GloBE Implementation Framework will be released by the end of 2022 at the latest. See EY Tax Alert 2022-0696 for details.
The OECD has posted the public comments it received on the Draft Model Rules for Domestic Legislation on Scope under Pillar One.
EY also submitted a comment letter on the GloBE Implementation Framework under Pillar Two. The letter provides overall comments about the importance of a robust GloBE Implementation Framework and key matters to be considered in developing it.
International tax talk (May 10)
During this EY Webcast, Ernst & Young professionals will address how the FTC regulations are expected to impact the ability of US MNEs to claim credits in the United States. At a high level, the webcast will also consider the interplay between the US FTC regulations, US policy perspectives and implementation of the Organisation for Economic Co-operation and Development’s BEPS 2.0 initiative.
How MNEs can adapt to TP developments in financial transactions and related controversy (May 11)
During this EY Webcast, a global panel of EY transfer pricing leaders will discuss key trends in Asia-Pacific and in Europe in the area of transfer pricing financial transactions that are shaping the future cross-border controversy landscape.
Work reimagined: How to prepare for ‘renaissance and recommitment’ (May 17)
During this EY Webcast, Ernst & Young professionals will explore the results of the newly released EY 2022 Work Reimagined Survey, which included more than 17,000 employees and 1,500 employers across 22 countries.
Recent Tax Alerts
— Apr 27: US Department of Homeland Security announces humanitarian parole sponsorship program for Ukraine (Tax Alert 2022-0687)
— Apr 27: Updates provided regarding US designated Temporary Protected Status for Cameroon and Ukraine (Tax Alert 2022-0685)
— Apr 27: Kenya publishes additional regulations on beneficial ownership (Tax Alert 2022-0680)
— Apr 22: Eswatini presents 2022 Budget (Tax Alert 2022-0663)
— Apr 28: Taiwan amends documentation requirements for amortization of goodwill (Tax Alert 2022-0681)
Canada & Latin America
— Apr 27: Canada announces program changes targeted to help attract and retain talent (Tax Alert 2022-0684)
— Apr 27: Canada's budget 2022 and the updated immigration imperative (Tax Alert 2022-0683)
— Apr 13: Brazil to propose new transfer pricing system in line with OECD (Tax Alert 2022-0606)
— Apr 27: Sweden's new work permit legislation to go into effect on June 1 (Tax Alert 2022-0682)
— Apr 25: EU VAT rates proposal agreed to and published in the Official Journal (Tax Alert 2022-0674)
— Apr 25: OECD releases public consultation document on Extractives Exclusion under Amount A for Pillar One (Tax Alert 2022-0673)
— Apr 25: Portugal | European Court of Justice decision on withholding tax applicable on dividends distributed to nonresident Undertakings for Collective Investment discussed (Tax Alert 2022-0672)
— Apr 22: Austria implements new wage tax exemption for profit sharing payments made to employees (Tax Alert 2022-0664)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
|Internal Revenue Bulletin of May 2, 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.