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March 26, 2023
2023-0558

U.S. International Tax This Week for March 24

Ernst & Young's U.S. International Tax This Week newsletter for the week ending March 24 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

The Internal Revenue Service (IRS) issued Notice 2023-27 on 21 March, announcing that Treasury and the IRS intend to issue guidance related to the treatment of certain nonfungible tokens (NFTs) as collectibles for tax purposes. Pending the issuance of that guidance, the IRS intends to determine whether an NFT constitutes an IRC Section 408(m) collectible by analyzing whether the NFT's associated right or asset is a collectible, under a look-through analysis.

While some NFTs may represent a right or asset explicitly listed under IRC Section 408(m), such as gemstones, other assets may require further clarification in the ensuing guidance. In particular, the IRS will make a determination on the extent to which a digital file may constitute a "work of art" under IRC Section 408(m)(2)(A). Notice 2023-27 requests comments on specific questions, offering taxpayers the opportunity to provide technical input on future guidance.

Addressing BEPS 2.0, a senior Treasury official this week said negotiations have been so challenging that he does not expect the Inclusive Framework (IF) will be able to craft a permanent safe harbor under the Pillar Two global anti-base erosion (GloBE) rules. Recent guidance provided for several temporary safe harbors that apply to the first three years that GloBE is in effect. On the other hand, the official was also quoted as saying that the IF is working on a qualified domestic minimum top-up tax (QDMTT) safe harbor that would eliminate an in-scope multinationals' liabilities under the Income Inclusion Rule (IIR) and Undertaxed Profit Rule (UTPR).

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Upcoming Webcasts

How recent developments potentially impact cross-border tax controversy procedures and processes (March 30)
During this EY Webcast, Ernst & Young professionals 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)
During this EY Webcast, Ernst & Young professionals will explore how taxpayers perceive and manage tax risk and controversy in 2023.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (April 21)
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; and (iii) breaking developments.

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Recent Tax Alerts

United States

— Mar 21: USCIS announces mail delivery process for receiving ADIT (I-551) stamp (Tax Alert 2023-0533)

Africa

— Mar 23: South Africa announces upcoming changes to address visa application backlogs and processing times (Tax Alert 2023-0552)

— Mar 20: Nigeria's Tax Appeal Tribunal rules that network facilities/infrastructure providers should not be subject to the National Information Technology Development Act levy (Tax Alert 2023-0526)

Asia

— Mar 21: China Mainland eases travel restrictions and reinstates certain visa-free policies (Tax Alert 2023-0534)

Canada & Latin America

— Mar 23: Canadian Post-Graduation Work Permit holder extensions announced (Tax Alert 2023-0553)

— Mar 22: Costa Rican Tax Authority creates National Large Taxpayers Dialogue Forum (Tax Alert 2023-0547)

— Mar 22: Costa Rican authorities amend Joint Resolution for Transparency and Beneficial Owner Register (Tax Alert 2023-0546)

— Mar 22: Honduran Government to file new tax reform before the National Congress (Tax Alert 2023-0545)

— Mar 22: Council of Ministers of Economic Integration of Central America establishes US$3 charge for each DUCA-F transmitted through the SIECA platforms (Tax Alert 2023-0541)

— Mar 20: Uruguayan Tax Office clarifies substance requirements applicable to the Corporate Income Tax's source criteria (Tax Alert 2023-0521)

Europe

— Mar 22: Luxembourg submits draft legislation introducing public country-by-country reporting for multinational enterprises (Tax Alert 2023-0542)

— Mar 22: Germany Federal Ministry of Finance publishes draft BEPS 2.0 Pillar Two implementation bill (Tax Alert 2023-0540)

— Mar 21: Spain's Large Business Unit to now accept only digital signatures for work and residence permit applications (Tax Alert 2023-0535)

— Mar 20: Cyprus Tax Authority publishes 10-year government bond yield rates for NID purposes (Tax Alert 2023-0516)

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

Middle East

— Mar 23: Turkey introduces additional tax for 2022 (Tax Alert 2023-0557)

— Mar 23: Turkey introduces tax amnesty (Tax Alert 2023-0556)

— Mar 22: UAE issues additional guidance on determination of tax residency for individuals (Tax Alert 2023-0539)

Oceana

— Mar 17: Australian Treasury releases Exposure Draft Bills on thin cap changes and tax transparency disclosure of information (Tax Alert 2023-0510)

Multinational

— Mar 22: EY Tax articles discuss how BEPS 2.0 may impact your operations (Tax Alert 2023-0538)

— Mar 21: The Latest on BEPS and Beyond | March 2023 (Tax Alert 2023-0537)

— Mar 20: OECD updates to MAP and APA guidance have implications for US multinationals (Tax Alert 2023-0524)

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IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2023-12Internal Revenue Bulletin of March 20, 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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