May 21, 2023
U.S. International Tax This Week for May 19
Ernst & Young's U.S. International Tax This Week newsletter for the week ending May 19 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 BEPS 2.0 Pillar One project is expected to follow a revised, three-step implementation program, according to Manal Corwin, the new director of the OECD Centre for Tax Policy and Administration, who addressed a 12 May tax conference in Washington, D.C. According to the OECD official, if there is agreement on the Multilateral Convention (MLC) text by the Inclusive Framework, the target will be to release it by the end of July. The second step will be an internal country process to determine whether domestic legislation along with the MLC is necessary and to determine politically whether the country can sign on to the convention. Step three, the OECD director said, is actual ratification by countries. Corwin also indicated there will be consideration of whether Model Rules should accompany the MLC text once it is shared.
Corwin, a former Treasury official, suggested that 40 countries have indicated their intent to adopt Pillar Two through their own domestic legislation and praised the collaborative process with stakeholders that has influenced the drafting of the rules. No specific technical issues or other implementation issues were discussed, but it is understood that the OECD continues to work through priorities for additional implementation guidance and some additional rules could be released by late summer, with another set of new guidance to follow by year-end.
This next set of guidance will likely cover the rules for the qualified domestic minimum top-up tax safe harbor and how transferable tax credits, like those enacted as part of the Inflation Reduction Act, will be treated for purposes of the Model Rules.
Corwin added that other tax projects before the OECD include addressing rules to minimize compliance costs and recommendations on the increasing mobility of workers, crypto assets, and carbon mitigation.
The proposed US-Chile tax treaty may move forward after the Memorial Day recess, according to Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ), with a resolution consenting to treaty ratification being added to the committee's calendar for markup. Senate Finance Committee and Foreign Relations Committee members and Treasury officials reportedly reached agreement last week to address concerns over changes made by the 2017 TCJA that could result in US companies facing double taxation. The solution, according to the press, is a separate declaration that will be added to the ratification resolution, stating that the Senate and Treasury will continue to discuss and ensure that future tax treaties reflect current US law. Senate Foreign Relations Committee Ranking Member Jim Risch (R-ID) indicated the deal is complete, saying "We're going to get this done very quickly."
Private equity and private capital quarterly tax webcast (June 8)
During this EY Webcast, Ernst & Young professionals will discuss recent global private equity (PE) industry trends and the outlook for changes relevant to PE and alternative funds, transactions, fund professionals, and portfolio companies.
Recent Tax Alerts
— May 15: Kenya proposes tax changes under the Finance Bill, 2023 (Tax Alert 2023-0888)
Canada & Latin America
— May 15: Costa Rica | Free Trade Commission eliminates customs duties for certain products from China (Tax Alert 2023-0886)
— May 12: Brazil Senate approves Provisional Measure addressing new transfer pricing rule, enforceable from 1 January 2024 (Tax Alert 2023-0878)
— May 18: EU customs reform proposal embraces modern approach to e-commerce (Tax Alert 2023-0906)
— May 18: Italian Tax Authority rules effects of UK VAT groups not recognized for Italian VAT purposes (Tax Alert 2023-0905)
— May 18: Serbia to introduce Single Permits for work and residence authorization (Tax Alert 2023-0904)
— May 17: EU finance ministers reach political agreement on updated compromise text for Directive introducing tax transparency rules for crypto assets (DAC8) (Tax Alert 2023-0897)
— May 17: Sweden to implement a new work permit processing system by end of 2023 (Tax Alert 2023-0895)
— May 17: Sweden considers proposed amendments to citizenship rules (Tax Alert 2023-0892)
— May 16: Bulgaria: Decision of CJEU on Bulgarian referral raises refund potential for certain VAT payments (Tax Alert 2023-0890)
— May 15: Spain implements major changes in EU Blue Card regulations (Tax Alert 2023-0885)
— May 12: Greece's new immigration law to go into effect on 1 January 2024 (Tax Alert 2023-0873)
— May 16: The Latest on BEPS and Beyond | May 2023 (Tax Alert 2023-0891)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
|Internal Revenue Bulletin of May 15, 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:
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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.