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March 19, 2023

U.S. International Tax This Week for March 17

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 17 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.


Treasury Secretary Janet Yellen on 16 March testified before the Senate Finance Committee during a hearing ostensibly on the President's Fiscal Year 2024 Budget but that focused on the current banking crisis as well as the Organisation for Economic Co-operation and Development (OECD)-led global tax agreement. Committee Republicans expressed concern about various aspects of the BEPS 2.0 negotiations, with Ranking Member Mike Crapo saying he opposed the OECD agreement. Members of both parties also expressed concern about Secretary Yellen's recent comments that future limited free trade agreements focused on battery minerals with the European Union (EU) and other allies would not need approval from Congress.

The US and the EU reportedly are negotiating a deal that would permit European companies to qualify for some of the available clean vehicle tax credits enacted by the Inflation Reduction Act (IRA). President Biden and the EU Commissioner on 10 March issued a joint statement that describes the talks as aimed at allowing EU companies to meet the mineral requirements for the Section 30D electric vehicle tax subsidy. The agreement is being coordinated by an EU-US task force on the IRA.

The recent determination of hyperinflationary status for the Turkish Lira has federal income tax implications for US multinationals. Inflation data published by the International Monetary Fund (IMF) confirms that the cumulative inflation rate for the Turkish Lira (TRY) exceeded 100% for the 36 calendar months ended 31 December 2022.

Given that the TRY now qualifies as hyperinflationary under Treas. Reg. Section 1.985-1, taxpayers and qualified business units (QBUs) that use the TRY as their functional currency must adjust their taxable income and/or earnings and profits for their 2023 tax year. Adjustments for the TRY's hyperinflationary status could trigger gains and losses for these taxpayers and affect previously calculated deemed inclusions for US shareholders of controlled foreign corporations.

The TRY's hyperinflationary status could require certain taxpayers and QBUs with TRY nonfunctional currency-denominated transactions to mark those transactions to market for their 2022 tax year, while also affecting their eligibility for potential exceptions and elections under US federal income tax regulations.

Upcoming Webcasts

Tax in a time of transition: legislative, economic, regulatory and IRS developments (March 17)
During this EY Webcast, Ernst & Young professionals will provide updates on:(i) the US economy and tax policy; (ii) what’s happening at the IRS; (iii) breaking developments.

EY Webcast addresses new developments about the CHIPS and Science Act of 2022 (March 21)
The CHIPS Act aims to build a domestic US supply chain for semiconductor chips in the face of foreign competition. The law includes $52.7 billion in funding for semiconductor manufacturing subsidies, grants and loans. During this EY Webcast, our panel of subject-matter professionals from across the EY organization as they share their insights on the CHIPS and Science Act of 2022 and the application process.

How recent developments potentially impact cross-border tax controversy procedures and processes (March 30)
During this EY Webcast, representatives from jurisdictions around the world will share emerging trends in cross-border controversy. They will also discuss the OECD’s recently published Bilateral APA Manual (BAPAM), Manual on the Handling of Multinational MAPs and APAs (MoMA), and the revised BEPS Action 14 review process.

What to know about the 2023 EY Tax risk and controversy survey results — Americas and Europe (April 5)
A worldwide pause in tax enforcement, intended in part to help businesses continue to operate during the global pandemic, is over, according to respondents of the 2023 EY Tax risk and controversy survey. In this EY Webcast for Americas and Europe audiences, we will explore how taxpayers perceive and manage tax risk and controversy in 2023.

Recent Tax Alerts

United States

— Mar 16: International policy changes represent nearly 30% of total tax increases in President Biden's FY2024 budget (Tax Alert 2023-0501)

— Mar 16: New developments about the CHIPS and Science Act of 2022 (Tax Alert 2023-0489)


— Mar 16: Japan's Tax Authority confirms that a representative and registration in Japan as required under Companies Act does not create a PE (Tax Alert 2023-0491)

— Mar 15: Pakistan increases Sales Tax and Federal Excise tax rates (Tax Alert 2023-0484)

— Mar 14: Malaysia allows Singapore applicants to apply for Entry Visas online (Tax Alert 2023-0477)

— Mar 14: Malaysia expedites pass endorsement for eligible Employment Pass and Professional Visit Pass applicants (Tax Alert 2023-0476)

Canada & Latin America

— Mar 16: Uruguay's President announces tax reductions that would alleviate some tax burdens for individual taxpayers and small to medium-sized companies (Tax Alert 2023-0502)

— Mar 16: Costa Rican Customs Authorities communicate end of temporary relief for maritime freight costs (Tax Alert 2023-0500)

— Mar 16: Mexico deposits instrument for ratification of the MLI (Tax Alert 2023-0493)

— Mar 15: Uruguayan Government proposes exemptions to aid the agricultural sector given its state of emergency (Tax Alert 2023-0487)

— Mar 14: Chilean Chamber of Deputies rejects tax reform bill (Tax Alert 2023-0480)


— Mar 17: UK increases Plastic Packaging Tax rate (Tax Alert 2023-0506)

— Mar 16: Sweden exempts certain residence and work permit applicants from passport verification process (Tax Alert 2023-0496)

— Mar 16: Sweden postpones deadline for report on enhancements to immigration regulations until January 2024 (Tax Alert 2023-0495)

— Mar 16: UK announces launch of Electronic Travel Authorisation scheme in phases starting in November 2023 (Tax Alert 2023-0494)

— Mar 16: UK Chancellor delivers Spring Budget 2023 (Tax Alert 2023-0492)

— Mar 14: Kosovo passport holders to soon be able to travel to the EU without a visa (Tax Alert 2023-0475)

— Mar 14: UK updates right to work guidance for employers (Tax Alert 2023-0474)

— Mar 14: UK publishes Statement of Changes to Immigration Rules (Tax Alert 2023-0472)

— Mar 14: Estonian tax measures triggered after new countries including Russia are added to EU list of non-cooperative jurisdictions (Tax Alert 2023-0468)

Middle East

— Mar 15: Dubai reinstates former import value threshold of consignments (Tax Alert 2023-0485)

IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2023-12Internal Revenue Bulletin of March 20, 2023

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.