October 15, 2023
U.S. International Tax This Week for October 13
Ernst & Young's U.S. International Tax This Week newsletter for the week ending October 13 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 OECD/G20 Inclusive Framework (IF) on BEPS on 11 October released the text of a new multilateral convention (MLC) that "updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes [DSTs]." According to an OECD press release, the Multilateral Convention to Implement Amount A of Pillar One reflects the current consensus among IF members. The MLC also includes several provisions that are meant to address certain unique circumstances of developing Inclusive Framework countries.
The MLC was delivered to G20 Finance Ministers and Central Bank Governors in a new OECD Secretary-General Tax Report ahead of their meeting this week in Morocco. The released MLC was accompanied by an Explanatory Statement and the Understanding on the Application of Certainty of Amount A (which describes administration and dispute resolution parameters).
Amount A of Pillar One addresses the "reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable multinational enterprises (MNEs) operating in their markets, regardless of their physical presence." It is also meant to ensure the repeal and proliferation of DST and relevant similar measures. According to the OECD, Pillar One is expected to reallocate approximately $200 billion in profits to market jurisdictions each year, resulting in global tax revenues of between $17 billion and $32 billion, based on 2021 data.
Manal Corwin, director of the OECD's Center for Tax Policy and Administration, this week was quoted as saying the draft MLC is considered an "intermediate step" in the process to get countries to sign the document. The goal reportedly is to have 130 countries sign the MLC by the end of the year.
On the same day as the OECD release, Treasury issued a statement requesting public comments on the BEPS Pillar One MLC text and accompanying documents. According to the Treasury release, the Administration considers "release of the draft Pillar One documents a key step forward in the Pillar One negotiations. … Treasury stands behind the negotiations, which have resulted in many difficult compromises by all sides with respect to both the design of the partial reallocation of taxing rights and the elimination of discriminatory digital services taxes and similar measures." Written comments to Treasury are due by 11 December and must be submitted electronically to: OTP_Pillar1MLC@treasury.gov.
Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) in a 10 October letter called on the U.S. Trade Representative (USTR) to make clear that the United States will forcefully defend American employers against Canada's proposed 3% DST. The senators urged the USTR to tell the Canadian government it will "immediately respond using available trade tools upon Canada's enactment of any DST." The proposed Canadian levy would go into effect in 2024, but be retroactive to 2022.
New Brazilian TP rules: What companies need to consider (October 17)
During this EY Webcast, panelists discuss key features of the latest Brazilian transfer pricing (TP) rules enacted recently and what it means for companies.
How to energize a workforce in the great rebalance (October 17)
During this EY Webcast, Ernst & Young professionals discuss the EY 2023 Work Reimagined Survey with insights from 17,050 employees and 1,575 employers in 22 countries, revealing the contours of new workforce realities.
How transferable tax credits are changing the tax landscape (October 17)
The Inflation Reduction Act (IRA) introduced federal transferable tax credits. This EY Webcast, will cover many FAQs, including which tax credits are transferable, an update on the contents of the recently released proposed regulations and how the transfer process works.
Business impacts of sustainability and ESG tax policies (October 18)
During this first in a quarterly series of EY Webcast, Ernst & Young professionals will be discussing the role of tax in sustainability and how it can impact businesses’ ESG strategy and operations. Topics will include: (i) the impact of sustainability on business and tax operations; (ii) the sustainability tax landscape; and (iii) the legislative and tax policy emphasis on climate change.
EY Tax.Tech™ Ecosystem series: Finance and Tax convergence - the next transformation frontier (October 19)
In this dynamic, complex, and competitive landscape, Finance and Tax alignment is critical and can unlock data to help identify synergies and establish viable and enduring business value. During this EY Webcast, we will explore how Thomson Reuters tax and accounting clients have adopted a transformation mindset through better aligning with the finance agenda, integrating into an enterprise resource planning (ERP) strategy, and helping their people, processes and technology improve their tax function and better utilize their ONESOURCE suite of products.
Tax in a time of transition: legislative, economic, regulatory and IRS developments (October 20)
During this EY Webcast, Ernst & Young professionals will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.
Crypto and digital asset information reporting: Navigating the operational challenges of the recently proposed regulations (November 1)
The proposed regulations issued by the IRS and Treasury Department introduce new standards unlike any seen previously in the digital asset space. From traditional financial institutions to decentralized exchanges, firms across the industry will need to determine how the new regulatory requirements impact any existing processes and technology, from customer onboarding to reporting. During this EY Webcast, Ernst & Young professionals will discuss operational challenges, implementation considerations, and maintaining a seamless client experience in the dynamic digital asset sector.
Realizing the full potential of your tax and finance function: Insights and leading practices for financial services institutions (November 7)
During this EY Webcast, Ernst & Young professionals will discuss how financial services institutions are elevating their tax operating models to: (i) empower their people to shape change; (ii) utilize technology to improve efficiency and data integrity; and (iii) future-proof their tax and finance responsibilities.
EY Guides and Publications
Global Tax Policy and Controversy Watch | October 2023 edition
The latest edition of the Global Tax Policy and Controversy Watch is available now. Highlights in this edition include (1) Argentina’s evaluation of a proposal to enact a 15% corporate minimum tax, (2) Brazil’s introduction of an individual income tax bill affecting taxation of foreign investment income, and (3) interim guidance published by the US IRS on the corporate alternative minimum tax.
Recent Tax Alerts
— Oct 10: United States | Proposed Regulations would amend IRC Section 367(b) regulations applying to certain cross-border triangular reorganizations and inbound nonrecognition transactions (Tax Alert 2023-1683)
Canada & Latin America
— Oct 12: Dominican Republic appoints payment processors as withholding and collection agents for VAT (Tax Alert 2023-1689)
— Oct 10: Argentine Government amends the Income Tax Law, incorporating 'cedular' tax for 'high-income' individuals (Tax Alert 2023-1682)
— Oct 09: Canada's Underused Housing Tax Act — 2022 filing deadline fast approaching; no extensions announced for 2023 (Tax Alert 2023-1678)
— Oct 06: Costa Rica increases period of authorized stay for visa-exempt business visitors and other non-residents (Tax Alert 2023-1669)
— Oct 12: OECD/G20 Inclusive Framework launches Multilateral Convention to implement the Subject to Tax Rule (Tax Alert 2023-1698)
— Oct 12: Sweden extends Temporary Protection Directive for Ukrainian nationals and residents until March 2025 (Tax Alert 2023-1692)
— Oct 12: Irish immigration authorities request certain Residence Permit holders to submit renewal applications before 31 October 2023 (Tax Alert 2023-1690)
— Oct 09: Italian Parliament passes Italian Windfall Tax for banks (Tax Alert 2023-1679)
— Oct 09: Cyprus issues draft legislative proposal on Pillar Two global minimum tax (Tax Alert 2023-1676)
— Oct 09: Swedish government confirms new salary threshold to go into effect on 1 November 2023 (Tax Alert 2023-1674)
— Oct 06: Belgium's new proposal for mandatory electronic invoicing from 1 January 2026 (Tax Alert 2023-1666)
— Oct 06: OECD releases outcomes of sixth peer review on BEPS Action 13 on country-by-country reporting (Tax Alert 2023-1665)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2023-42||Internal Revenue Bulletin of October 16, 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.