Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

April 19, 2019
2019-5551

Report on recent US international tax developments – 19 April 2019

United States (US) Government officials this week offered their insights on the ongoing global digital taxation debate. A senior Treasury official was quoted as saying that certain exporting and headquarters jurisdictions may need to accept a modest reallocation of taxing rights to market jurisdictions in order to achieve global consensus. He indicated that a certain loss of revenue by some countries may be the price for reaching a coordinated, coherent solution to the digital taxation conundrum. The official cautioned that absent an agreed-upon global solution, unilateral measures will lead to more complexity and “enormous risks of double taxation.” He also said that he expected the arm’s-length standard would continue to apply in the great majority of transfer pricing cases, but that some other approaches may be necessary in some instances.

Another US Treasury official this week touched on the Organisation for Economic Co-operation and Development (OECD)’s ongoing pillar 2 consultation work on finding a common global anti-base erosion and profit-shifting approach. The official suggested that while it is too early to say how the global framework may be crafted, a future OECD standard may lean towards a “looser consensus and not being highly prescriptive about how you implement the basic goal of achieving a minimum tax rate.” He reiterated earlier cautionary comments by US Government officials that there are significant design complexities and technical challenges associated with a minimum tax regime.

In a 16 April release, the Internal Revenue Service (IRS) Large Business and International division announced three new compliance campaigns targeting captive service providers, offshore private banking (specifically targeting offshore accounts), and “loose filed Forms 5471.” The goal of the captive service providers campaign is to ensure that US multinationals pay their captive service providers an arm’s-length price for those services. The IRS plans to use issue-based examinations and soft letters in the campaign. The goal of the Form 5471 campaign is to improve compliance with the requirement to properly attach a Form 5471 to an income tax, partnership or exempt organization return.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP, International Tax Services, Washington, DC
  • Arlene Fitzpatrick | arlene.fitzpatrick@ey.com
  • Joshua Ruland | joshua.ruland@ey.com

ATTACHMENT

 
 

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.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more