The US Congress is in the middle of a two-week recess, after which it will begin the process of drafting a budget reconciliation bill. Both chambers of Congress passed the same FY2025 budget resolution before the recess, and it is expected that the reconciliation process will be used to extend Tax Cuts & Jobs Act provisions that expire at the end of 2025. The legislation is also expected to address defense, energy, border security and other areas.

Treasury and the IRS on 17 April announced in Notice 2025-23 their intent to withdraw Reg. Section 1.6011-18, which identifies certain partnership related-party basis-shifting transactions as transactions of interest.

Notice 2025-23 also withdraws an earlier notice (Notice 2024-54), which outlined certain proposed regulations intended to be issued as to the tax treatment of partnership related-party basis-shifting transactions.

The OECD/G20 Inclusive Framework (IF) on BEPS issued a statement on 11 April, following its meeting in Cape Town, South Africa. The brief statement described the meeting as having had constructive discussions, including on the original Base Erosion and Profit Shifting (BEPS) project and the BEPS 2.0 project. The statement further noted that members recognized the critical importance of securing certainty and stability, in particular with respect to Pillars One and Two, and agreed to continue discussions in furtherance of this objective.

There has been some speculation regarding how the Trump Administration would respond to the BEPS 2.0 project going forward. Recall that following his inauguration on 20 January 2025, President Trump issued an Executive Orders on the OECD "Global Tax Deal." The Executive Order stated that the Global Tax Deal has no force and effect in the United States. It further provided for the US Treasury Secretary to develop options for responding to foreign countries' tax rules that are extraterritorial in nature or that could disproportionately impact US companies, with findings and recommendations to be delivered to the President.

According to the tax press, following the OECD meeting, Manal Corwin, director of the OECD's Centre for Tax Policy and Administration, was quoted as saying that the IF members "welcomed the opportunity to hear directly from US delegates about their specific concerns, which underlined prior public statements" and that "the discussions were effective because they reinforced the important common ground amongst all delegates that helps set the compass for next steps." Corwin was also quoted as saying that "there was a common interest in preserving … the policy gains associated with the minimum tax and to seeking a path forward that addresses the concerns that have been expressed," recognizing that the United States has the global intangible low-taxed income regime and that many countries have already adopted BEPS Pillar Two.

Corwin also said, "Anything that we can do to reduce the administrative burden and to secure and reinforce certainty, including through dispute resolution mechanisms, will remain at the top of the agenda." The OECD director added that there has been no further progress on Pillar One since the 13 January statement from the IF co-chairs.

On 4 April, the intergovernmental negotiating committee of the United Nations (UN) Framework Convention on International Tax Cooperation released an initial roadmap and working methods for developing the Framework Convention and two early protocols, along with guidelines for intersessional work. On 24 December 2024, the UN General Assembly had adopted Resolution 79/235, formally approving the Terms of Reference for the development of the UN Framework Convention on International Tax Cooperation. This resolution provided for the establishment of an intergovernmental negotiating committee responsible for drafting the Framework Convention and two early protocols.

The latest roadmap outlines a schedule for the development process with milestones for each workstream from March 2025 to July 2027, including the dates, responsible entities, actions and documents to be prepared. The intergovernmental negotiating committee plans to convene three sessions annually during this period, with the first substantive session scheduled for August 2025. The roadmap and guidelines contemplate informal consultations between these formal meeting sessions. A Global Tax Alert provides details.

Late on 11 April, President Trump published a Presidential Memorandum exempting certain electronic goods from his Reciprocal Tariff Policy (the additional tariffs) explained in Executive Order 14257, issued on 2 April. Tariffs imposed under a 1 February 2025 Executive Order and Fact Sheet, which cite a national emergency under the International Emergency Economic Power Act, still apply to these electronic goods. The electronic goods described in the 11 April Presidential Memorandum are only exempted from the additional tariffs on imports from US trading partners. The Trump Administration has suggested that the exemption is temporary. A Global Tax Alert has details.

The US also recently launched an investigation into pharmaceuticals and semiconductors. More specifically, the US Secretary of Commerce is seeking public comments related to investigations into imports of pharmaceuticals and pharmaceutical ingredients and semiconductors and semiconductor manufacturing equipment. The Commerce Department's Bureau of Industry and Security initiated both investigations to determine the effects that the importation of these goods has on national security. The comment period is only 21days long, ending on 7 May. See this Global Tax Alert for details.