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22 November 2023

U.S. International Tax This Week for November 22

Ernst & Young's U.S. International Tax This Week newsletter for the week ending November 22 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.

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Spotlight

Both Houses of Congress return from the Thanksgiving holiday recess next week, with prospects for a tax bill still uncertain.

The recent approval of a two-step continuing resolution to extend federal government funding into early 2024 – separate deadlines in January and February – means there will not be a must-pass year-end appropriations bill to which such tax packages are typically appended. It remains to be seen whether tax provisions can be added to spending bills either in January or February, or possibly to other legislation sometime between now and then.

A business tax package would likely center around Tax Cuts and Jobs Act (TCJA) pre-cliffs that relate to the five- or 15-year amortization for R&D expenses, rather than expensing under IRC Section 174 and the IRC Section 163(j) interest deduction limitation based on earnings before interest and taxes (EBIT) rather than earnings before interest, taxes, depreciation and amortization (EBITDA), both of which took effect in 2022, and 100% expensing, which is phased down after 2022. Any deal would likely require achieving some parity between the cost of addressing those provisions and an expansion of the child tax credit, which is backed by Democrats.

The Canadian government presented its 2023 Fall Economic Statement on 21 November, confirming its intention to proceed with plans to enact a 3% Digital Services Tax (DST) in 2024, setting the stage for a possible showdown with the US. The proposed Canadian DST would be effective 1 January 2024 and apply retroactively to 1 January 2022. Bipartisan members of Congress have warned that the United States “would examine all options, including under our trade agreements and domestic statutes,” if Canada introduces the DST.

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Upcoming Webcasts

Spotlight on BEPS 2.0: developments and practical implications for US MNEs (December 13)
Jurisdictions are enacting and proposing legislation implementing the Pillar Two rules developed under the Organisation for Economic Co-operation and Development/G20’s project on addressing the tax challenges of the digitization of the economy (BEPS 2.0). Global minimum tax rules are set to take effect as soon as 2024, and many multinational entities (MNEs) still have a lot to do to prepare. Join this EY webcast for an action-oriented panel discussion, moderated by EY’s Jose Murillo, National Tax Department Leader and former US Department of the Treasury Deputy Assistant Secretary (International Tax Affairs).

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (December 15)
Companies need to keep pace with a tax and economic environment in transition. This requires understanding tax policy trends and anticipating future developments that could impact their operations. 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.

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Recent Tax Alerts

United States

Africa

Asia

Canada & Latin America

Europe

Middle East

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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: 2023-1940

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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