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January 22, 2023
2023-0131

U.S. International Tax This Week for January 20

Ernst & Young's U.S. International Tax This Week newsletter for the week ending January 20 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

On 8 July 2022, Treasury officially began the process of terminating the US-Hungary Tax Treaty (signed in 1979). According to the Treasury Press Release, termination of the Treaty is effective on 8 January 2023, and with respect to taxes withheld at source, the Convention shall cease to have effect on 1 January 2024. On 27 December 2022, the text of a joint statement between the US and Hungary (Statement) was posted on the Internal Revenue Service (IRS) Country-by-Country (CbC) Reporting Jurisdiction Status Table.

The Statement acknowledges that the 2018 Agreement on Exchange of Country-by-Country Reports is expected to terminate on 8 January and provides that the US and Hungary are in the process of negotiating an intergovernmental agreement and competent authority arrangement to allow for the automatic exchange of CbC Reports. Prior to entry into force of these agreements, the Statement outlines agreements reached with respect to exchange of CbC Reports for fiscal years commencing 1 January 2021.

In an IRS Chief Counsel Memorandum (CCA 202302011) dated 10 January, the US concluded that cryptocurrency that has declined in value — even to less than a penny per unit — is not considered a deductible Internal IRC Section 165 worthless loss if the taxpayer took no action to abandon the property right. According to the facts, the cryptocurrency continued to be traded on at least one exchange and the IRS noted that it "had liquidating value, though it was valued at less than one cent at the end of 2022."

The Organisation for Economic Co-operation and Development announced on 13 January that former US Treasury official Manal Corwin will become director of the Centre for Tax Policy and Administration (CTPA), replacing Grace Perez-Navarro who will retire on 31 March. Perez-Navarro, who was the deputy director of the CTPA, became the director after long-time head Pascal Saint-Amans left the position in October 2022.

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Upcoming Webcasts

How life sciences tax departments are preparing for sustainability (January 24)
During this EY Webcast, Ernst & Young professionals will explore sustainability tax trends and global developments in the life sciences sector. EY teams of life sciences and sustainability tax thought leaders will discuss, and share their perspectives on emerging trends and hot topics relevant to this market.

International tax talk quarterly series: With the EY Global Tax Desk Network (January 24)
During this EY Webcast, Ernst & Young professionals will highlight developments that could affect multinational companies operating in Hong Kong and the Chinese mainland.

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Recent Tax Alerts

Africa

— Jan 18: Companies incorporated in Tanzania Mainland are no longer required to register a subsidiary company in Zanzibar (Tax Alert 2023-0114)

— Jan 13: Ghana enacts various amendments to tax laws introduced in the 2023 Budget Statement (Tax Alert 2023-0095)

Asia

— Jan 19: South Korea announces new COVID-19-related restrictions for travelers arriving from the Chinese mainland, Hong Kong and Macau (Tax Alert 2023-0124)

— Jan 18: China suspends issuance of certain visas for Japanese and South Korean nationals (Tax Alert 2023-0108)

— Jan 13: India announces new COVID-19-related entry requirements for travelers arriving from certain jurisdictions (Tax Alert 2023-0097)

Canada & Latin America

— Jan 19: Brazil announces tax recovery measures (Tax Alert 2023-0127)

— Jan 19: Guatemala's Ministry of Public Finance amends Value Added Tax Regulations (Tax Alert 2023-0126)

— Jan 19: Honduras' ZEDE regime is recognized as abolished following review by OECD Forum on Harmful Tax Practices (Tax Alert 2023-0125)

— Jan 18: Brazilian Federal Revenue Service issues new PIS and COFINS Regulation (Tax Alert 2023-0120)

— Jan 18: Peru enacts new rules for tax incentives of expenses related to research and development (Tax Alert 2023-0116)

Europe

— Jan 18: Ireland provides early notification, refunds for invalid General Employment Permit applications (Tax Alert 2023-0117)

— Jan 18: Switzerland updates occupation list released for 2023 (Tax Alert 2023-0110)

— Jan 18: UK provides final response summarizing review findings for Tier 1 Investor Visa Route (Tax Alert 2023-0109)

— Jan 17: Portugal amends contribution on single-use packaging made of plastic or aluminum, or multi-material with plastic or aluminum on ready-to-eat meals (Tax Alert 2023-0111)

— Jan 17: Spain limits scope of use and enjoyment VAT rule from 2023 (Tax Alert 2023-0107)

— Jan 17: France implements measures to address high energy prices (Tax Alert 2023-0104)

— Jan 13: Clarifications and further guidance provided for Spain's plastic packaging tax which came into force on 1 January 2023 (Tax Alert 2023-0100)

— Jan 13: Luxembourg amends Common Reporting Standard list of participating and reportable jurisdictions (Tax Alert 2023-0096)

Middle East

— Jan 18: UAE implements mandatory unemployment insurance scheme (Tax Alert 2023-0121)

Oceana

— Jan 13: Australia reintroduces COVID-19 screening for travelers from China (Tax Alert 2023-0098)

Multinational

— Jan 17: The Latest on BEPS and Beyond | January 2023 (Tax Alert 2023-0112)

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

  • Legislation
  • Tax reform guidance
  • Tax compliance
  • Foreign Tax Credit
  • Capital markets
  • Cryptocurrency
  • Tax treaties
  • Withholding
  • Transfer pricing
  • BEPS 2.0 (US)
  • Foreign Bank and Financial Accounts (FBAR)
  • IRS forms
  • Miscellaneous
  • OECD
  • BEPS 2.0

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2023-04Internal Revenue Bulletin of January 23, 2023

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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.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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