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November 6, 2022

U.S. International Tax This Week for November 4

Ernst & Young's U.S. Tax This Week newsletter for the week ending November 4 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.


A Treasury official this week conceded that taxpayers may not see much guidance in regard to the new corporate alternative minimum tax and stock buyback tax provisions when those provisions come into effect on 1 January 2023. The provisions were enacted in August as part of the Inflation Reduction Act. "You may have to kind of do your best until you hear from us. I know that's not the easiest message to hear, but I think that might be where we are," the official said. According to the Treasury official, no decision has yet been made on the form of future guidance. With regard to the stock buyback provision, the official acknowledged that guidance is needed on the "timing and methods of payment," and suggested that could come in the form of something other than formal guidance.

An Internal Revenue Service (IRS) official was quoted as saying taxpayers should not expect them to implement a transition period or delay in the implementation date for the final IRC Section 1446(f) regulations (TD 9926) that were released in October 2020. IRC Section 1446(f) imposes a new withholding tax on transfers by non-US persons of interests in partnerships that are engaged in a US trade or business. The IRS announced in Notice 2021-51 that it would amend the regulations under IRC Section 1446(a) and IRC Section 1446(f) to defer the applicability date of certain provisions by one year to 1 January 2023. The affected provisions related to withholding include: (i) on transfers of interests in publicly traded partnerships (PTPs); (ii) on distributions made with respect to PTP interests; and (iii) by non-publicly traded partnerships on distributions to transferees who failed to withhold properly.

An IRS official this week was quoted as saying that taxpayers should expect more penalties to be asserted in transfer pricing cases. The official said the agency is continuing to review cases more closely, including those with transfer pricing documentation, to determine if penalties are warranted. An official earlier said the IRS hopes the increased penalties will result in taxpayers providing better transfer pricing documentation reports. House Ways and Means Committee ranking member Kevin Brady and committee member Kevin Hern wrote to Treasury Secretary Janet Yellen requesting the retention of all documents and communications related to the OECD BEPS 2.0 Pillar One Agreement. In a letter that was released on 31 October, the Republican committee members wrote: "The lack of a sufficient response and information from the Administration to date is disappointing and unacceptable." According to the lawmakers, Congress must know what companies "will be affected, what jurisdictions will be losing taxing rights, and what jurisdiction will be gaining taxing rights under the current proposals" so it can evaluate the impact of the proposal on the US fiscal position. The letter requested a response by 10 November.

Upcoming Webcasts

International tax talk quarterly series with the EY Global Tax Desk Network: A discussion on recent tax developments in the LATAM region (November 8)
Latin America has a complex tax environment, and recent developments in the region have resulted in additional considerations for year-end and future years. During this EY Webcast, Ernst & Young professionals will address the expected impact of regional developments.

BorderCrossings ... With EY transfer pricing and tax professionals (November 17)
During this EY Webcast, Ernst & Young transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.

Recent Tax Alerts


— Nov 02: Senegal introduces COVID-19 vaccination requirement for inbound travelers (Tax Alert 2022-1648)


— Oct 31: Japan’s consumption tax reform will be effective from 1 October 2023 (Tax Alert 2022-1640)

Canada & Latin America

— Nov 03: Peruvian President ratifies Convention to Harmonize the Double Tax Treaties of Pacific Alliance (Tax Alert 2022-1655)

— Nov 03: EY Canada's Tax Matters @ EY for November 2022 (Tax Alert 2022-1653)

— Nov 02: Argentine Tax Authority extends suspension of mandatory disclosure regime (Tax Alert 2022-1646)

— Oct 28: Peru enacts regulations on temporary VAT reduction for specific hotels and restaurants (Tax Alert 2022-1628)


— Nov 03: Spain implements reverse hybrid mismatches rule under EU ATAD 2 (Tax Alert 2022-1654)

— Nov 01: Spanish tax authorities deny interest deductions on debt to fund a share premium distribution, overall transaction declared as abusive in binding report (Tax Alert 2022-1643)

— Oct 31: Spain relaxes entry rules for individuals traveling from outside of the European Union and Schengen Area (Tax Alert 2022-1639)

Middle East

— Nov 03: UAE amends VAT Decree Law (Tax Alert 2022-1650)

— Nov 01: Turkey extends application of corporation tax exemption on "FX-protected Deposit and Participation Accounts" to 30 September dated balance sheets (Tax Alert 2022-1641)

IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2022-45Internal Revenue Bulletin of November 7, 2022

Additional Resources

EY’s Tax News Update, 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’s Tax and Law Guides. Tax and Law Guides | EY - Global 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.