October 2, 2022
U.S. International Tax This Week for September 30
Ernst & Young's U.S. International Tax This Week newsletter for the week ending September 30 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 passed a continuing resolution (CR) to extend federal government funding beyond 30 September and into December, hours before the fiscal year deadline. Both the House and Senate will adjourn and will not return to session until after the November midterm elections.
After the midterm elections, and before the December expiration of the just-passed CR, Congress is expected to try to assemble a year-end bill that could address tax and possibly retirement issues, in addition to government funding that could extend through the remainder of the fiscal year.
EY has commented to Treasury on the Inflation Reduction Act's enactment of the corporate alternative minimum tax (CAMT) in a 15 September 2022 letter. EY writes that it has become clear that "book income (i.e., income or gain reflected on a corporation's US GAAP financial statements) resulting from transactions intended to qualify for tax-free treatment under IRC Sections 355 and 361 (i.e., Section 355 Separations) should be excluded from the calculation of adjusted financial statement income (AFSI) for purposes of the CAMT." The firm writes that this position is consistent with the purpose underlying IRC Section 355, the correct implementation of the new CAMT, and "how book income from extraordinary transactions such as Section 355 Separations are generally viewed and treated in the marketplace."
EY notes "there is clear regulatory authority for achieving this outcome and allowing corporations to continue traditional transactional planning that is critical to achieving optimal business success." Therefore immediate guidance is needed that "excludes book income from Section 355 Separations (as well as other acquisitive and restructuring transactions that Congress intended to treat as tax-free) from AFSI, while the broader issues raised by the CAMT continue to be studied and addressed over time."
Treasury's Financial Crimes Enforcement Network (FinCEN) on 29 September issued a final rule requiring certain entities to file reports with FinCEN that identify two categories of individuals — (1) beneficial owners of an entity, and (2) individuals who have filed an application with specified governmental authorities to create the entity or register it to do business. The new regulations implement Section 6403 of the Corporate Transparency Act (CTA), enacted in 2021.
The Organisation for Economic Co-operation and Development Forum on Tax Administration (FTA) on 28 September released a 92-page bilateral advance pricing arrangement manual that is intended to serve as a guide to streamline the advance pricing agreement process for both taxpayers and tax administrations. It includes 29 best practices, but does not mandate binding rules. The best practices are meant to show how to mitigate delays, avoid information asymmetries, increase transparency and ensure that there are realistic expectations.
Financing the energy transition: Tax equity, direct pay and transferability (October 6)
During this EY Webcast, Ernst & Young professionals will explore tax equity structures, the interplay with direct pay and transferability provisions, and how each impact energy expansion investments.
EY Tax.Tech™ Ecosystem series: Unlocking the power of connected tax analytics (October 20)
During this EY Webcast, Ernst & Young professionals will showcase our EY Connected Tax Analytics in Power-BI, leveraging Thomson Reuters integration to supercharge and automate your corporate income tax compliance preparation and review process in ONESOURCE Income Tax. They’ll take you through the latest in use cases and preview what’s ahead.
Recent Tax Alerts
— Sep 26: Algeria issues governing decrees related to new Investment Law (Tax Alert 2022-1443)
Canada & Latin America
— Sep 27: Canada to lift remaining COVID-19 border requirements including vaccination, testing, and ArriveCAN as of October 1 (Tax Alert 2022-1448)
— Sep 23: Brazil publishes Provisional Measure addressing withholding tax exemption for certain Brazilian corporate securities and private equity funds (Tax Alert 2022-1434)
— Sep 29: German Government issues draft order decree law on cross-border transfer of function rules (Tax Alert 2022-1460)
— Sep 29: Denmark proposes taxation of dividends paid to foreign states (Tax Alert 2022-1453)
— Sep 28: Spanish Tax Authority issues FAQs regarding new plastic packaging tax (Tax Alert 2022-1452)
— Sep 26: UK Government presents mini-Budget and Growth Plan (Tax Alert 2022-1444)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2022-40||Internal Revenue Bulletin of October 3, 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.