June 5, 2022
U.S. International Tax This Week for June 3
Ernst & Young's U.S. Tax This Week newsletter for the week ending June 3 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.
President Joe Biden this week offered a three-part plan to address US inflation, with the third leg of his plan calling for reducing the federal deficit through "common-sense reforms to the tax code."
According to the President: "We should level the international taxation playing field so companies no longer have an incentive to shift jobs and profits overseas. And we should end the outrageous unfairness in the tax code that allows a billionaire to pay lower rates than a teacher or firefighter."
Congress returns next week from the Memorial Day holiday with limited time to reach consensus on a pared down budget reconciliation bill before the August recess. The House is slated to be in session only six of the remaining weeks before it is scheduled to adjourn on 1 August; the Senate will adjourn on 8 August. With the House-passed Build Back Better (BBB) stalled, the path forward on a possible replacement is unclear given the host of major issues currently facing Congress.
Senator Joe Manchin has suggested he could accept a reconciliation bill that splits revenue from tax and prescription drug reform between deficit reduction and spending, probably mostly addressing climate change. Informal discussions on that package reportedly have begun between Senator Manchin and Senate Majority Leader Chuck Schumer. Senate Democrats will try to craft a BBB replacement that is expected to focus on reducing fossil fuel dependence, combating climate change and lowering inflation. There is speculation that a deal must come together by 4 July.
Representative Jared Golden and a bipartisan group of legislators introduced the Support Ukraine Through Our Tax Code Act in the House this week. The bill would deny US foreign tax credits and other tax benefits to companies that operate and pay taxes in Russia and Belarus. The bill text is available here; a summary of the legislation is available here.
A senior Treasury official this week was quoted as saying that the US supports excluding both reinsurance and asset management from the BEPS 2.0 Pillar One requirements. The official noted that, "this may come as a surprise," as the US originally opposed the carveout for regulated financial services.
The Organisation for Economic Co-operation and Development (OECD) on 27 May also issued a public consultation document titled "Pillar One — A Tax Certainty Framework for Amount A." A separate public consultation document, "Tax Certainty for Issues Related to Amount A" was released concurrently. The public consultation runs until 10 June.
According to an OECD press release, the Tax Certainty Framework for Amount A "guarantees certainty for in-scope groups over all aspects of the new rules, including the elimination of double taxation." This, the OECD claims, would eliminate the possibility of "uncoordinated compliance activity in potentially every jurisdiction where a group has revenues, as well as a complex and time-consuming process to eliminate the resulting double taxation."
OECD Secretary General Mathias Cormann said at the World Economic Summit in Davos last week that he is "quietly optimistic" about the success of the BEPS 2.0 global tax agreement and, while an ambitious timeline was set to keep pressure on, he suspects it is "most likely we will end up with a practical implementation from 2024 onwards," a year later than nations had previously targeted.
EY Guides, Surveys, and Reports
How the metaverse and Web3 are creating novel tax issues
Multinationals are already building their presence in the metaverse, aware it will be a key transactional space. But while the metaverse is expected to nurture a blossoming layer of commerce, significant questions remain over taxation. Corporations and governments face a broad range of metaverse challenges and the need to navigate an increasingly complex global tax landscape. Learn more in this new EY article, "How the metaverse and Web3 are creating novel tax issues."
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.
Competent Authority procedures in cross-border controversy in the Americas (June 15)
During this EY Webcast, Ernst & Young professionals will discuss trends and developments in Advance Pricing Agreements (APAs) and Mutual Agreement Procedure (MAP) in selected jurisdictions in the Americas.
Recent Tax Alerts
Canada & Latin America
— Jun 02: EY Canada's Tax Matters @ EY for June 2022 (Tax Alert 2022-0863)
— Jun 02: Nunavut budget 2022-23 discussed (Tax Alert 2022-0862)
— May 31: Recent updates to Quebec immigration discussed (Tax Alert 2022-0856)
— May 26: Uruguay's Administrative Contentious Court rules acquisition costs for certain construction projects may qualify for partial deduction (Tax Alert 2022-0843)
— Jun 01: The Netherlands announces 30% facility cap (Tax Alert 2022-0860)
— Jun 01: Spain tightens rules for taxation of long-term incentives under special tax regime for inbound employees (Tax Alert 2022-0859)
— Jun 01: Ireland launches consultation on Pillar Two implementation (Tax Alert 2022-0857)
— May 31: European Union to implement Entry and Exit System (EES) and European Travel Information and Authorisation System (ETIAS) (Tax Alert 2022-0852)
— May 26: UK announces new 25% energy profits levy (Tax Alert 2022-0846)
— May 26: Norway proposes changes to VAT rules on e-commerce (Tax Alert 2022-0845)
— Jun 02: Turkey introduces continuous reporting requirement of certain information for property listings published on the internet (Tax Alert 2022-0861)
— May 31: DHS announces procedures for Afghan Temporary Protected Status applications and offers Special Student Relief for Afghan F-1 students (Tax Alert 2022-0855)
— May 31: Australia's immigration policy as of July 1 discussed (Tax Alert 2022-0853)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2022-22||Internal Revenue Bulletin of May 31, 2022|
| ||2022-23||Internal Revenue Bulletin of June 6, 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.