30 October 2022

U.S. International Tax This Week for October 28

Ernst & Young's U.S. International Tax This Week newsletter for the week ending October 28 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.

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Spotlight

A Treasury official this week said it is working on establishing "prophylactic" measures to address new tax regimes in the context of future tax treaties. He indicated that Treasury wants to include rules in US treaties that would consider tax regimes that do not yet exist in order to prevent issues arising later.

The official was also quoted as saying that the US and Croatia are expected to sign a first-ever income tax treaty before the end of the year. He confirmed earlier reports that US reservations to the proposed US-Chile tax treaty are pending approval in the Chilean Parliament. The Senate Foreign Relations Committee last spring approved the Chilean treaty subject to two reservations. The official further said there are current plans to update the existing US-Switzerland and US-Israel tax accords.

On a separate topic, a Treasury official this week was quoted as saying it hopes to release proposed crypto regulations before the end of the year. The Infrastructure Investment and Jobs Act, enacted in November 2021, imposed information-reporting requirements on sales of cryptocurrency and other "digital assets." Cryptocurrency and other digital assets sold by customers of "brokers" will be subject to Form 1099-B reporting and cost-basis reporting.

The legislation specifically amended the Code to make certain changes, including expanding the definition of a broker, defining digital assets, and applying the cost-basis-reporting regime for securities to digital assets. It also required brokers to report to the Internal Revenue Service the basis of digital assets transferred to their customers or other non-brokers and requires digital assets to be treated as "cash" when received in the course of a trade or business. The amendments will be effective for information returns filed in 2024 for the 2023 calendar year.

The official was quoted as saying the proposed rules would provide clarity as to effective dates regarding reporting, which she noted is necessary for market participants.

An Organisation for Economic Co-operation and Development (OECD) official this week also said that the organization wants as many jurisdictions as possible to adopt the OECD's Crypto Asset Reporting Framework (CARF) to ensure harmonization for reporting and other related areas. The OECD on 10 October published the final CARF, which would bring cryptocurrency and other crypto-assets into scope for reporting. The OECD earlier indicated that it is working to a "ensure a broad implementation of the CARF as the single global reporting framework for Relevant Crypto-Assets." The official said this week that the OECD would begin work on the implementation package in the coming months and that it would include an automatic exchange of information framework, a section on compliance measures to ensure CARF is applied appropriately, along with an implementation timeline.

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Upcoming Webcasts

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (November 18)
During this EY Webcast, Ernst & Young professionals will discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change. Panelists will provide updates on: (i) The US economy and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS.

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Recent Tax Alerts

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2022-44Internal Revenue Bulletin of October 31, 2022

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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.

Document ID: 2022-1631