August 13, 2023
U.S. International Tax This Week for August 11
Ernst & Young's U.S. International Tax This Week newsletter for the week ending August 11 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.
President Biden signed the United States-Taiwan Initiative on 21st-Century Trade First Agreement Implementation Act (H.R. 4004) on 7 August. The legislation stipulates that the United States Trade Representative must send negotiating texts to the relevant congressional committees during trade negotiations, and Congress must approve any trade agreements. This follows on-going dialogue between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office to enhance economic and commercial ties.
Separately, there are some proposals regarding tax. For example, Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) announced that the Finance Committee will meet in September to mark-up tax legislation to strengthen the US economic relationship with Taiwan. Senator Wyden and Senator Crapo, along with House Ways & Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard E. Neal (D-MA) on 12 July released a discussion draft of legislation for a US-Taiwan tax agreement. In addition, the Senate Foreign Relations Committee on 13 July approved the Taiwan Tax Agreement Act (S. 1457), which would authorize the President to negotiate and enter into a tax agreement.
Russia on 8 August reportedly suspended certain double tax treaty benefits with countries that Russia designates as "unfriendly states." According to press reports, Russian President Putin signed a decree on 8 August suspending certain provisions in tax treaties with 38 countries, including the United States, Canada, the United Kingdom and Australia. Press reports also indicate that the suspension will remain "until foreign states eliminate the violations they have committed of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities."
According to an advance unedited draft report dated 8 August, the United Nations (UN) is suggesting alternatives for promoting international tax cooperation. The report discusses existing international and multilateral arrangements, and notes that, while the OECD has "introduced several initiatives to engage and associate non-OECD members with its work … many of those countries find that there are significant barriers to meaningful engagement in agenda-setting and decision making." Consequently, "the substantive rules developed through these OECD initiatives often do not adequately address the needs and priorities of developing countries and/or are beyond their capacities to implement."
To promote cooperation among all countries, the UN "would leverage existing strengths and address gaps and weaknesses in current international tax cooperation efforts." It also proposed three options for furthering international tax cooperation:
- A binding multilateral convention that would "set out specific rules creating obligations, including rules that potentially place limits on exercising taxing rights"
- A binding framework convention that would "outline the core tenets of future international tax cooperation," including objectives, key principles and a governance structure
- A "non-binding multilateral agenda for coordinated actions, at the international, national, regional, and bilateral levels, on improving tax norms and capacity"
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 (August 31)
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).
Recent Tax Alerts
Canada & Latin America
— Aug 10: Canada's Department of Finance releases draft legislation for 2023 budget and other measures (Tax Alert 2023-1387)
— Aug 10: Brazil Senate considers VAT reform plan (Tax Alert 2023-1386)
— Aug 08: Chilean Government announces content of 'Fiscal Pact' (Tax Alert 2023-1377)
— Aug 07: Costa Rica's Tax Authority issues resolution on services related to exports exempt from VAT (Tax Alert 2023-1373)
— Aug 07: Peruvian Tax Authority establishes guidelines for applying Multinational Agreement to avoid Double Taxation of Andean Community (Tax Alert 2023-1371)
— Aug 04: El Salvador's Congress receives bills to amend International Services Law and the Law for Industrial and Commercial Free Zones (Tax Alert 2023-1369)
— Aug 10: UK increases penalties for employers and landlords that hire or rent to individuals who do not hold lawful immigration status in the UK (Tax Alert 2023-1385)
— Aug 09: Italy announces proposed one-time windfall tax for banks (Tax Alert 2023-1383)
— Aug 09: Serbia implements new rules relating to residence permits and Single Permits (Tax Alert 2023-1381)
— Aug 09: Luxembourg enacts legislation introducing public country-by-country reporting for multinational enterprises (Tax Alert 2023-1378)
— Aug 04: Hungary approves new work and residence permit for “guest workers” (Tax Alert 2023-1367)
— Aug 07: Israeli Parliament approves measures to boost investment in high-tech sector (Tax Alert 2023-1370)
— Aug 09: Global Tax Policy and Controversy Watch | August 2023 edition (Tax Alert 2023-1382)
— Aug 09: PE Watch | Latest developments and trends, August 2023 (Tax Alert 2023-1379)
Highlights of this edition include:
- Congressional Republicans criticize BEPS 2.0 project
- Senate moves on US-Taiwan tax relations
- Congress pivots to crypto assets, requests comments on tax uncertainties
Treasury and IRS news
- Treasury temporarily delays controversial foreign tax credit regulations
- 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
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2023-32||Internal Revenue Bulletin of August 7, 2023|
| ||2023-33||Internal Revenue Bulletin of August 14, 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.