July 24, 2022
U.S. International Tax This Week for July 22
Ernst & Young's U.S. Tax This Week newsletter for the week ending July 22 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.
The future of any budget reconciliation bill this year remains in doubt as Congress closes in on the August recess. Late last week, President Joe Biden issued a statement in which he called on Congress to pass a prescription drug bill immediately and indicated he would take executive action to address climate change if Congress does not act. The White House statement was in response to Senator Joe Manchin indicating that he would not support a budget reconciliation bill that includes climate change and tax increases (including international tax changes) at this time, following the latest high US inflation report. Senator Manchin said he would support a prescription drug bill, however. Senator Manchin reportedly left open the possibility of his support for passage of a broader reconciliation bill in September, but only if economic conditions ease.
Notwithstanding the new budget reconciliation landscape following Senator Manchin's announcement, some top Democrats are not ruling out a reconciliation bill with climate policies and tax increases. Senate Finance Committee Chairman Ron Wyden released a statement on 18 July saying, in part: "Conversations on clean energy must continue to preserve our options to move forward. Nearly all of the clean energy credits have already expired, and it will be difficult to extend them at the end of the year." The press reported this week that Democrats are expected to move on prescription drug and Affordable Care Act subsidies before the August recess. There remains some hope in the Democratic caucus that if US inflation eases, there may yet be a possibility to enact climate provisions.
Senator Manchin also threw a wrench in regard to the Organisation for Economic Co-operation and Development (OECD)-led global tax agreement, when he said he took Global Intangible Low-Taxed Income (GILTI) changes that would bring it in line with the Base Erosion and Profit Shifting (BEPS) Pillar Two 15% minimum tax off the table during recent reconciliation negotiations. While Senator Manchin said he agreed with a 15% minimum corporate tax, US inflation was too high to risk raising taxes at this time. He suggested he would look to August's inflation numbers before making a final decision on the matter. The White House meanwhile this week played down fears that the OECD global tax agreement was in jeopardy.
Treasury officially announced that the US on 8 July notified Hungary that it was terminating the US-Hungary tax treaty. According to the announcement, the treaty termination will be effective on 8 January 2023. Treaty termination provisions provide that the convention will cease to have effect with regard to withholding on 1 January 2024, and with respect to tax periods beginning on or after 1 January 2024.
EY Guides, Surveys, and Reports
Asean Mobility Spotlight (July 2022)
In this edition of the Asean Mobility Spotlight, we address the topic of employers' responsibility in ASEAN jurisdictions on complying with tax withholding or annual tax filing obligations of employees' remuneration.
Private equity and private capital — navigating transformative global and US legislative change (August 18)
During this EY Webcast, Ernst & Young professionals will discuss recent private equity and private capital industry trends and the outlook for US and international legislative and regulatory changes relevant to PE and alternative funds, transactions and portfolio companies.
Recent Tax Alerts
— Jul 20: Global Tax Policy and Controversy Watch | July 2022 edition (Tax Alert 2022-1099)
— Jul 19: USCIS to implement second phase of premium processing expansion for certain pending multinational manager/executive and national interest waiver petitions (Tax Alert 2022-1091)
— Jul 15: South African Revenue Service implements new protocol for estimated assessments (Tax Alert 2022-1064)
— Jul 18: China’s new Stamp Duty Law is now in effect (Tax Alert 2022-1086)
Canada & Latin America
— Jul 21: Brazilian Federal Revenue Service and the Inter-American Development Bank hold seminar as part of process to present new Brazilian transfer pricing system (Tax Alert 2022-1112)
— Jul 20: Costa Rica begins accepting applications for Digital Nomad Visas (Tax Alert 2022-1103)
— Jul 19: Canada resumes mandatory random testing for fully vaccinated air travelers (Tax Alert 2022-1092)
— Jul 18: Honduras joins the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Tax Alert 2022-1088)
— Jul 15: Uruguay's Executive Power presents accountability bill for 2021 to Parliament (Tax Alert 2022-1079)
— Jul 15: Uruguay's Administrative Contentious Court strikes down portion of decree regulating free trade zones (Tax Alert 2022-1078)
— Jul 21: UK Government releases documents for consultation prior to Finance Bill 2022/23 (Tax Alert 2022-1107)
— Jul 21: New Hungarian transfer pricing rules impose additional reporting requirements and require adjustments to the median (Tax Alert 2022-1106)
— Jul 21: Poland Tax Authority’s approach may lead to potential issues when applying withholding tax relief at source based on management board's statement (Tax Alert 2022-1105)
— Jul 20: Italy’s sugar tax will enter into force on 1 January 2023 (Tax Alert 2022-1101)
— Jul 18: The Netherlands issues new decree on profit attribution to permanent establishments (Tax Alert 2022-1083)
— Jul 15: Italian Court of Cassation holds domestic regime is applicable on distributions to nonresident mutual funds (Tax Alert 2022-1074)
— Jul 15: Portugal publishes guidance on contribution for single-use packaging made of plastic or multi-material with plastic in Portugal (Tax Alert 2022-1065)
— Jul 15: Israel adopts BEPS Action 13 principles (Tax Alert 2022-1073)
— Jul 20: The Latest on BEPS and Beyond | July 2022 edition (Tax Alert 2022-1094)
— Jul 19: G20 Finance Ministers reiterate commitment to BEPS 2.0 two-pillar implementation and call for action to finalize work (Tax Alert 2022-1093)
— Jul 15: OECD releases Progress Report on Amount A of Pillar One of BEPS 2.0 project: A detailed overview (Tax Alert 2022-1071)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2022-30||Internal Revenue Bulletin of July 25, 2022|
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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.