06 August 2023 U.S. International Tax This Week for August 4 Ernst & Young's U.S. International Tax This Week newsletter for the week ending August 4 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. —————————————————————————
Spotlight Congress has begun its August recess, with the Senate scheduled to return to Washington on 5 September and the House returning on 12 September. Much of September is expected to be taken up by passage and subsequent reconciliation of appropriation bills that must be enacted before the end of the government's fiscal year on 30 September. The Ways & Means Committee-passed American Families and Jobs Act from June — which addresses the TCJA "pre-cliffs" on IRC Section 174 R&D expensing, IRC Section 163(j) interest deduction limitations, and 100% expensing — was not brought to the House floor for a vote before the August recess. The Ways & Means bill is considered to be House Republicans' negotiating position for talks later this year regarding a possible year-end tax extenders package, should an opportunity emerge to attach it to a government spending or other must-pass legislative vehicle. In the Senate, Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) announced before the recess that the committee will meet in September to mark-up tax legislation to strengthen the US economic relationship with Taiwan. Recall that Senator Wyden and Senator Crapo, along with House Ways & Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) on 12 July released a discussion draft of legislation for a US-Taiwan tax agreement. According to the press release, the bill would significantly reduce withholding taxes on dividends, interest and royalties paid on these cross-border investments, among other measures. The Senate Foreign Relations Committee on 13 July also approved the Taiwan Tax Agreement Act (S. 1457), which authorizes the President to negotiate and enter into a tax agreement. The two proposals are not necessarily mutually exclusive. The IRS, on 4 August, released proposed consolidated return regulations under IRC Sections 1502, 1503, 1552, and 1563 that aim to modify and update existing regulations to reflect more than 50 years of statutory changes and remove regulations that have no current applicability to taxpayers. The IRS notes that the government is currently developing separate guidance to implement the new corporate alternative minimum tax (CAMT), including the application of the CAMT to consolidated groups. Nonetheless, the proposed regulations would offer guidance on computing consolidated estimated taxes that take into account the CAMT liability of a consolidated group. The proposed regulations would further revise Treas. Reg. Section 1.1502-9 to account for changes made by final foreign tax credit regulations (TD 9882) that were published in December 2019 and that provided guidance in regard to TCJA statutory changes. A Tax Alert is pending. An OECD official this week said that work will begin in September to address arbitrage tax planning that reportedly aims to "leverage" BEPS 2.0 Pillar Two safe harbors "beyond what was anticipated or expected" According to press reports, a Treasury official further elaborated that the OECD Working Party No. 11 is well aware of planning, and will be issuing anti-arbitrage guidance "as soon as possible" Working Party No. 11 was established with responsibility under the BEPS project for developing recommendations against aggressive tax planning. |
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Upcoming Webcasts 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. Tax and Finance Operate: Now. Next. Beyond. (August 23)
During this webcast, EY Global Compliance and Reporting practitioners will explore the current tax and finance operations landscape and share insights and results from the recently released EY survey. They will be joined by senior tax executives from Mondelez International, Inc. and UPS, who will share how their companies successfully revolutionized their tax and finance function and established a new tax operating model. They’ll also share practical approaches for industry professionals navigating global tax and finance operations. BorderCrossings ... With EY transfer pricing and tax professionals (31 August)
During this EY webcast, Ernst & Young professionals examine the difficulties in applying transfer pricing rules to attribute profits to permanent establishments considering both US and international tax treaties. Under US tax treaties, Article 7 governs profit attribution to permanent establishments and references the arm’s-length principle under Article 9. In response to a lack of clear and consistent interpretation of profit attribution under international tax treaties, the Organisation for Economic Co-operation and Development (OECD) developed the Authorized OECD Approach (AOA). —————————————————————————
EY Guides and Publications EY TradeWatch | Issue 2, 2023
In this edition, we continue to focus on trade trends, specifically disruption, technology, sustainability, trade facilitation, controversy and customs reform. Trade disruption continues, becoming effectively the "new normal". But how should businesses respond? This is a topic that is explored in depth in our latest report 'Refocusing on the global trade functional organization — a global trade perspective'. which is based on in-depth conversations and benchmarking studies with trade leaders in global companies. In this edition, we also continue the conversation on the trade function by looking at steps companies can take for 'Future-proofing the customs and trade function'. We set out why businesses should care about this topic now, and why having an effective, future-proofed trade function should be high on every trading company's agenda. In this edition, we also look at other trade trends, including sustainability and ESG regulations, the effective use of trade facilitation measures and managing controversy. We also look at customs reform in the EU and Canada and provide an update on Section 301 in the US. —————————————————————————
Recent Tax Alerts —————————————————————————
Recent Newsletters Congressional Republicans criticize BEPS 2.0 project Senate moves on US-Taiwan tax relations Congress pivots to crypto assets, requests comments on tax uncertainties IRS waives addition to tax for a corporation’s failure to make estimated tax payments of its CAMT IRS makes permanent fast-track program to resolve certain corporate PLR requests OECD/G20 Inclusive Framework releases technical documents on BEPS Pillars One and Two OECD releases Outcome Statement on progress on Pillars One and Two of BEPS 2.0 project OECD Secretary-General Tax Report provides international tax update OECD releases 2023 report on tax transparency in Latin America —————————————————————————
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. Document ID: 2023-1365 | 
