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May 8, 2022

U.S. International Tax This Week for May 6

Ernst & Young's U.S. Tax This Week newsletter for the week ending May 6 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.


Treasury Secretary Janet Yellen this week urged Congress to include a corporate minimum tax provision akin to the global minimum corporate tax proposal in BEPS 2.0 Pillar Two in any future budget reconciliation package. The Treasury Secretary reportedly said during a streamed interview that the Administration expects such a provision to be included as a revenue raiser in a future version of the stalled Build Back Better bill.

Regarding the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) project, a senior Treasury official this week said the US is working with the OECD on the Implementation Framework to clarify the treatment of US business credits for purposes of the OECD global minimum tax rules in Pillar Two. More specifically, the official was quoted as saying that Treasury is seeking some certainty as to how US incentives would be treated under the global anti-base erosion (GloBE) rules and the related Pillar Two commentary. "We're confident that the value of many of our general business credits is preserved under the OECD rules," she said.

Another Treasury official said the US wants additional public consultation on the draft package of Pillar One rules after the ongoing Pillar One public consultations on the major components of Pillar One end. The official said the US wants stakeholders to be able to comment on the "whole picture and provide full input." The Treasury official added that Pillar One is about stabilizing the global tax system, and "stabilization is not just about eliminating digital services taxes but also addressing the rise in transfer pricing and business profits disputes."

The Internal Revenue Service (IRS) on 3 May issued Notice 2022-23, publishing changes to the qualified intermediary (QI) withholding agreement rules that will allow a QI to assume withholding and reporting responsibilities for purposes of IRC Sections 1446(a) and (f). These changes generally would apply to a QI that transferred an interest in a publicly traded partnership (PTP) or received a distribution from a PTP on behalf of a QI account holder. According to the notice, the proposed changes will be included in the final QI agreement, with further amendments based on public comments the IRS receives; the deadline for those comments is 31 May. The final QI agreement will apply to QIs in effect on 1 January 2023, according to the notice.

An IRS official this week was quoted as saying that no decision has yet been made as to the scope of the financial transaction transfer pricing regulation project, notwithstanding there are less than two months left for this year's priority guidance plan. "It's too soon to tell what the full scope of the project will be — whether it's revisions that are more small tweaks or whether it is a more robust set of changes," the official said. He added that there is no timeline for completion of the regulation project.

Ten members of the House Ways and Means Committee on 29 April wrote to Treasury Secretary Yellen asking the Administration to delay implementation of the final foreign tax credit regulations that were issued in January 2022. The committee members wrote: "In light of the clear and ongoing challenges taxpayers are facing in compiling their financial earnings statements this quarter, for those elements where Treasury is unable to provide further administrative guidance to clarify the application of these regulations, we respectfully request that Treasury extend the implementation window for the final regulations."

A Treasury official this week confirmed that a first-ever US-Croatia income tax treaty is under review at the US State Department. The official confirmed that the proposed treaty will be ready for signature following certification of the translation.

Upcoming Webcasts

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.

What companies should know about the latest BEPS 2.0 dynamics (May 12)
During this EY Webcast, Ernst & Young professionals will provide an update on the latest developments and address key practical questions related to Pillar One and Pillar Two that are important in preparing for the “new normal” in this evolving global legislative 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.

Private equity and private capital quarterly tax webcast (May 17)
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.

BorderCrossings (May 25)
During this EY Webcast, Ernst & Young professionals will discuss issues arising from transactions and global economic developments impacting domestic transfer pricing (TP). Panelists will also review the latest state tax administrative approaches to resolving TP disputes, such as state advanced pricing agreement initiatives, as well as recent case law and legislative proposals – highlighting controversy considerations for multicorporate businesses.

The indirect tax technology journey: Now. Next. Beyond. (June 9)
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. This webcast will focus on leading practices for global indirect tax technology selection and implementation.

Recent Tax Alerts

Canada & Latin America

— May 04: Brazil allows taxpayers to settle certain debts from the tax regime preceding Law No. 12,973/2014 (Tax Alert 2022-0719)

— May 03: Highlights provided from Canada Revenue Agency's 2020 Mutual Agreement Procedure Report (Tax Alert 2022-0712)

— May 02: New enforcement guidelines from Cayman Islands detail circumstances under which financial institutions could face penalties for failing to comply with Common Reporting Standard (Tax Alert 2022-0709)

— Apr 29: Brazil increases social contribution on net profits rate for financial institutions and insurance companies (Tax Alert 2022-0701)

— Apr 29: Ontario budget 2022-23 discussed (Tax Alert 2022-0694)


— May 03: UK Tax Authority updates Plastic Packaging Tax Guidance (Tax Alert 2022-0710)

— May 02: Denmark introduces new filing requirements for transfer pricing documentation (Tax Alert 2022-0707)

Middle East

— Apr 29: UAE Ministry of Finance releases consultation document on corporate tax introduction (Tax Alert 2022-0695)


— Apr 29: OECD holds public consultation meeting on Implementation Framework for Pillar Two GloBE Rules (Tax Alert 2022-0696)

IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2022-19Internal Revenue Bulletin of May 9, 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.