July 30, 2023
U.S. International Tax This Week for July 28
Ernst & Young's U.S. International Tax This Week newsletter for the week ending July 28 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 on 21 July released Notice 2023-55, announcing temporary relief for taxpayers seeking a foreign tax credit (FTC) by deferring key components of Reg. Sections 1.901-2 and 1.903-1, which were issued in December 2021 (TD 9959, 87 FR 276; FTC Creditability Regulations). For tax years ending on or before 31 December 2023, the Notice generally allows taxpayers to apply (1) the former regulations' more permissive standards for determining whether a tax was a creditable net income tax under IRC Section 901, and (2) the current IRC Section 903 "in lieu of" tax rules without regard to the attribution requirement.
Treasury has indicated that it will continue to analyze — and consider amendments to — the FTC Creditability Regulations. Treasury is also considering whether, and under what conditions, to provide additional temporary relief beyond the relief period.
Taxpayers finalizing their 2022 tax returns and certain 2023 fiscal-year tax returns should assess the impact of any additional credits, as well as adjustments for deemed paid credits, IRC Section 904 calculations, eligibility for (and the effects of) the Global Intangible Low-taxed Income (GILTI) and subpart F high-tax exceptions, and other matters.
No relief is granted for foreign taxes paid in tax years ending after 31 December 2023. Given the temporary nature of the relief, and uncertainty around whether and to what extent it will be extended, taxpayers must simultaneously assess the impact of continued application of the full FTC Creditability Regulations.
Notice 2023-55 did not grant relief for other aspects of the FTC regulations that continue to pose challenges for taxpayers. For example, the Notice offers no relief under Reg. Section 1.861-20, which provides complex rules for allocating and apportioning foreign taxes. Those rules pose significant compliance and interpretational issues in many common scenarios. Moreover, they can lead to surprising results, including the loss of FTCs in certain cases.
EY Tax Alert 2023-1315 provides details.
The IRS on 26 July released Revenue Procedure 2023-26, formalizing a fast-track process for certain private letter ruling (PLR) requests that are primarily or solely under the jurisdiction of the IRS Associate Chief Counsel (corporate). The new program, with two notable changes, replaces a pilot program for PLRs, established under Revenue Proc 2022-10, that has been in effect since January 2022.
EY Guides, Surveys, and Reports
Global Immigration Trends and Highlights | April - June 2023
This publication provides a snapshot of corporate immigration developments worldwide. It is designed to support conversations regarding policies that have been proposed or implemented in key jurisdictions in the Americas, Asia-Pacific and EMEIA (Europe, Middle East, India, Africa) regions.
Tax in a time of transition: Legislative, economic, regulatory and IRS developments (August 18)
Please join us for a fast-paced 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 EY webcast series, panelists will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.
Recent Tax Alerts
— Jul 26: US Treasury provides welcome temporary relief from controversial foreign tax credit regulations (Tax Alert 2023-1315)
— Jul 26: East African Community implements tariff changes for the Financial Year 2023/24 (Tax Alert 2023-1308)
— Jul 21: Egypt introduces amendments to the Income Tax Law (Tax Alert 2023-1290)
— Jul 26: Philippines launches online platform for several immigration applications (Tax Alert 2023-1307)
— Jul 25: China Mainland resumes visa-free travel for nationals of Brunei and Singapore (Tax Alert 2023-1300)
Canada & Latin America
— Jul 26: Pacific Alliance Double Taxation Convention on pensions funds will apply beginning 1 January 2024 (Tax Alert 2023-1313)
— Jul 26: Costa Rica Tax Authority intends to scrutinize taxpayers claiming loss or zero profit on FY22 Corporate Income Tax returns (Tax Alert 2023-1312)
— Jul 26: Argentina applies tax on purchases of foreign currency in new transactions, provides preferential foreign-exchange rate to certain exported goods (Tax Alert 2023-1309)
— Jul 24: Canada's new mandatory disclosure rules now in effect (Tax Alert 2023-1298)
— Jul 27: UK publishes requirements for Transfer Pricing records (Tax Alert 2023-1321)
— Jul 25: German Ministry of Finance proposes interest-rate limitation rule (Tax Alert 2023-1301)
— Jul 25: Finnish Consulate in Saint Petersburg to close by 1 October 2023 (Tax Alert 2023-1299)
— Jul 21: European Commission releases new rules as part of Circular Economy Action Plan: textiles and batteries waste (Tax Alert 2023-1287)
— Jul 27: G20 Finance Ministers welcome progress made on BEPS 2.0 project (Tax Alert 2023-1318)
— Jul 26: OECD releases public Consultation Document on Pillar One Amount B on baseline distribution (Tax Alert 2023-1316)
— Jul 25: OECD/G20 Inclusive Framework releases Subject to Tax Rule model treaty provision and commentary (Tax Alert 2023-1302)
— Jul 24: OECD/G20 Inclusive Framework releases document on Pillar Two GloBE Information Return (Tax Alert 2023-1294)
— Jul 21: OECD/G20 Inclusive Framework releases additional Administrative Guidance on Pillar Two GloBE Rules: Detailed review (Tax Alert 2023-1292)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2023-31||Internal Revenue Bulletin of July 31, 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.