June 18, 2023
U.S. International Tax This Week for June 16
Ernst & Young's U.S. International Tax This Week newsletter for the week ending June 16 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 House Ways and Means Committee on 13 June approved three separate tax packages: the Tax Cuts for Working Families Act, Small Business Jobs Act, and Build It in America Act, following a 10-hour markup. The three bills, combined into the American Families and Jobs Act, fulfill Chairman Jason Smith's (R-MO) commitment to develop a tax-based economic package. According to some press reports, House Republicans are looking to bring the tax package to the House floor for a vote as early as the week of 19 June, although there are obstacles. If that does not happen, the package will come before the House sometime after the 4 July holiday.
The bills are not expected to be enacted in their current form, given that the Tax Creation and Jobs Act "pre-cliffs" relating to expensing of R&D costs, interest deduction limitations under IRC Section 163(j), and 100% expensing of manufacturing equipment remain stalled as Democrats insist on expanding the Child Tax Credit. Democrats also strongly oppose rolling back clean energy provisions from the Inflation Reduction Act that Republicans hope to use as revenue offsets for the released tax package.
There is some speculation that last week's proposed tax legislation could represent the House GOP's starting position for talks later this year aimed at putting together a year-end tax extenders package.
The proposed US-Chile income tax treaty may come to the Senate floor for a final vote as early as 21 June, according to reports. The long-stalled 2010 tax convention was reported out of the Senate Foreign Relations Committee on 6 June. If a Senate vote does not take place this week, it is expected to come before the Senate the following week.
Treasury recently announced in a Memorandum of Agreement (MOA) that tax regulations would no longer be reviewed by the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs, a practice established under the Trump Administration. In April 2018, a prior MOA created a new framework for the review of certain tax regulations (above $100 million annual non-revenue economic impact) that was intended to increase economic analysis and review of tax rules. That added level of review established a new layer of input (and delay, according to critics) in the regulatory process.
In OECD news, the co-chair of the Inclusive Framework (IF) was quoted as saying the IF is committed to finalizing the Multilateral Convention (MLC) within the earlier-announced timeline of concluding negotiations before the end of July to open the agreement for signature. The OECD in December 2022 released draft MLC provisions on Digital Services Taxes and other relevant similar measures in connection with Amount A of BEPS 2.0 Pillar One.
According to the official, negotiators are still grappling with the treatment of withholding taxes in Amount A, with the issue being whether withholding taxes should be considered in the marketing and distribution safe harbor. Developing countries are suggesting that including withholding taxes in the safe harbor computation could adversely affect them.
Another OECD official, Achim Pross, deputy director of the Centre for Tax Policy and Administration's international cooperation and tax administration division, recently said that as countries implement global minimum tax rules, it may be time to consider amending or eliminating certain duplicative anti-avoidance rules, such as certain CFC regimes.
EY Guides, Surveys, and Reports
TradeFlash | June 2023
In this issue, we provide links to EY articles covering key trade topics such as the treatment of royalties, sustainable trade, the impact of supply chain disruption on trade compliance, trade technology and UK free trade agreements.
Finance and treasury: How to navigate the changing global tax landscape (June 28)
During this EY Webcast, Ernst & Young professionals will discuss key tax trends and topics that will affect global finance and treasury activities.
BorderCrossings … with EY transfer pricing and tax professionals (June 29)
During this EY Webcast, Ernst & Young transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.
Recent Tax Alerts
— Jun 14: Nigeria | Highlights of Finance Act 2023 (Tax Alert 2023-1056)
— Jun 14: Ethiopia issues Excise Tax (Amendment) Proclamation, 2023 (Tax Alert 2023-1055)
— Jun 09: Thailand BOI announces new measure for companies impacted by global minimum tax under the BEPS 2.0 Pillar Two project (Tax Alert 2023-1037)
Canada & Latin America
— Jun 16: Argentine Government issues regulations for the promotional regime of investments in the automotive and auto parts industry (Tax Alert 2023-1069)
— Jun 15: Panama Tax Authority establishes procedure for closing commercial establishments that fail to comply with obligation to issue and/or keep invoices or receipts (Tax Alert 2023-1068)
— Jun 14: Canada's Department of Finance releases consultation paper on transfer pricing rules (Tax Alert 2023-1059)
— Jun 13: Mexico offers tax incentives to taxpayers who perform productive economic activities in the States of Oaxaca and Veracruz (Tax Alert 2023-1053)
— Jun 13: Peruvian Supreme Court enacts a mandatory ruling regarding Certificates of Residence for Double Tax Treaty purposes (Tax Alert 2023-1051)
— Jun 13: Supreme Court of Canada applies GAAR in Deans Knight (Tax Alert 2023-1048)
— Jun 13: Peruvian Tax Authority clarifies methodology for determining FMV of listed/unlisted shares in indirect disposal scenario (Tax Alert 2023-1047)
— Jun 15: Poland extends authorized period of stay for Ukrainian nationals (Tax Alert 2023-1067)
— Jun 15: Lithuania announces new rules governing the issuance of National Visas (Tax Alert 2023-1066)
— Jun 15: Denmark | Corrections to past VAT returns will incur interest from 1 July 2023 (Tax Alert 2023-1062)
— Jun 14: Denmark proposes cultural levy on providers of on-demand streaming services (Tax Alert 2023-1060)
— Jun 13: Slovenia announces new regulations regarding Single Permits and residence permits (Tax Alert 2023-1049)
— Jun 13: Global Tax Policy and Controversy Watch | June 2023 edition (Tax Alert 2023-1052)
Highlights of this edition include:
- Congress passes debt ceiling bill, averts possible default
- US House Ways & Means Republicans introduce tax increase on foreign companies to influence global tax deal
- IRS proposed regulations would turn off Section 367(d) following certain IP repatriations
- IRS addresses taxation of digital currency
- US officials comment on CAMT
- IRS GLAM concludes FIRPTA regularly-traded-stock-exception test under Section 897(c)(3) applies at partnership level
- US negotiating tax agreements with Israel, Switzerland and Norway
- BEPS Pillar One to follow revised implementation plan
- G7 Finance Ministers welcomed OECD progress report on tax cooperation, reiterated commitment to Pillars One and Two implementation
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2023-24||Internal Revenue Bulletin of June 12, 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.