January 29, 2023
U.S. International Tax This Week for January 27
Ernst & Young's U.S. International Tax This Week newsletter for the week ending January 27 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.
The Congressional Joint Committee on Taxation (JCT) will issue a "Blue Book" in the first half of 2023 on four pieces of tax legislation that were enacted by the 117th Congress, according to the JCT chief of staff this week. The Blue Book reportedly will cover provisions enacted by the Inflation Reduction Act — which includes the new corporate alternative minimum tax and stock buyback excise tax — the American Rescue Plan Act of 2021, the CHIPS and Science Act of 2022, and the Infrastructure Investment and Jobs Act. The coming Blue Book will also cover the Consolidated Appropriations Act, 2023, which was enacted on 29 December 2022, as well as certain technical corrections. According to the tax press, the Blue Book likely will be released by the end of June 2023.
In August 2019, Treasury and Internal Revenue Service (IRS) released proposed regulations (REG-130700-14, Prop. Reg. Section 1.861-19) addressing cloud-based transactions, including characterization issues. The proposed regulations also requested comments on administrable rules for income sourcing from cloud services. According to a Treasury official quoted this week, the US is "seriously taking into account" requests from various commentators requesting that they refrain from issuing guidance providing income sourcing rules on cloud transactions, as it drafts final regulations regarding cloud-based transactions. According to the tax press, a senior IRS official indicated that the proposed regulations would be finalized some time in 2023.
A Treasury official this week indicated that it is considering how the US can implement the OECD Crypto-Asset Reporting Framework (CARF). The official was quoted as saying that last year's Infrastructure Investment and Jobs Act, as well as prior law, give the IRS the necessary authority "to require reporting of most of the information" mandated by CARF.
The Organisation for Economic Co-operation and Development (OECD) on 10 October 2022 published its final report which details new and amended reporting requirements covering the reporting of crypto-assets and e-money, as well as revisions to the Common Reporting Standard. Introduction of CARF would bring crypto-currency and other crypto-assets into scope for reporting. The obligation would fall on intermediaries or other service providers which allow or make a platform available for the exchange of crypto-assets into currency or other assets, facilitate certain reportable payments or allow for the transfer of crypto-assets. The OECD is continuing to work on CARF. The Treasury official noted that CARF closely follows the US broker reporting rules.
Addressing other crypto asset reporting issues emanating from the Infrastructure Investment and Jobs Act, the official said that IRC Section 6050I amendments that add cryptocurrencies to the definition of cash in regard to currency transaction reports will not be addressed in the IRC Section 6045 broker reporting guidance that is presently under regulatory review. The IRC Section 6045 guidance will include related issues, the official indicated, but would not say whether it will include IRC Section 6045A.
The IRS announced on its campaign webpage on 20 January that the IRC Section 956 subpart F cash pooling campaign is no longer active. The campaign originally was announced in November 2017. The acting head of the Large Business and International (LB&I) division last November warned taxpayers, however, that having retired campaigns does not mean that those issues are no longer being reviewed and ongoing exams will continue to review issues even if a particular IRS issue campaign becomes inactive.
EY Guides and Publications
2023 Congressional Outlook | New House Republican majority brings oversight, fiscal deadlines to forefront of activity in Washington
Republicans have taken control of the House with a slim majority and a conservative bloc that wielded power in the voting to choose a Speaker. The group gained additional power through rules changes and concessions, intended to address their concerns over omnibus appropriations bills like the one approved at the end of 2022 and lifting the debt limit without spending reforms. In this publication, EY's Washington Council Ernst & Young takes a look at the legislative agenda for 2023.
What India’s 2023-24 Budget could mean for its economy (February 9)
During this EY Webcast, Ernst & Young professionals will help explain the fine print of the 2023-24 India Budget, covering the macroeconomic and policy announcements, direct tax proposals and indirect tax proposals.
Tax in a time of transition: legislative, economic, regulatory and IRS developments (February 17)
During this EY Webcast, Ernst & Young professionals will provide an overview of recent tax and economic developments designed to help you stay on top of changes in today’s shifting economic, legislative and regulatory environment. In this regularly occurring webcast series, panelists will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; (iii) breaking developments.
Recent Tax Alerts
— Jan 20: Mauritius Protocol amending Double Taxation Avoidance Agreement with Germany will be in force as of 1 July 2023 (Tax Alert 2023-0132)
— Jan 19: South Korea announces new COVID-19-related restrictions for travelers arriving from China Mainland, Hong Kong and Macau (Tax Alert 2023-0124)
Canada & Latin America
— Jan 24: Costa Rica’s Tax Authority establishes new criteria for use of information contained in Transparency and Beneficial Ownership Register (Tax Alert 2023-0142)
— 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 24: The Netherlands issues favorable Decree clarifying application of transfer pricing anti-mismatch rules for asset transfers to Dutch corporate taxpayer through contributions and distributions (Tax Alert 2023-0149)
— Jan 24: Luxembourg's 2023 tax and legal forecast provided (Tax Alert 2023-0147)
— Jan 24: Spain issues draft List of Non-Cooperative Jurisdictions for Tax Purposes (Tax Alert 2023-0146)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
|Internal Revenue Bulletin of January 30, 2023
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.