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

June 28, 2019

Report on recent US international tax developments 28 June 2019

The United States (US) Senate Foreign Relations Committee on 25 June, approved by voice vote protocols amending US tax treaties with Japan, Luxembourg, Spain and Switzerland. The four protocols are among agreements that have been awaiting action in the Senate for nearly a decade and held up over Committee member Rand Paul’s concerns over information sharing provisions. Senator Paul reportedly offered an amendment to the Spain protocol to require a higher standard for information sharing, which was rejected.

No timetable regarding Senate consideration is available. The Senate is out of session next week for the US Independence Day recess. Following the vote, Foreign Relations Committee Chairman Jim Risch was quoted as saying he would be “very surprised” if the Senate adjourned for the August recess without approving the protocols. Senate Majority Leader Mitch McConnell reportedly highlighted the tax agreements during a floor speech on 25 June, calling them “extremely important” to a number of businesses.

The Committee did not act on new tax treaties with Hungary, Chile and Poland, which may require reservations to account for enactment of the Tax Cut and Job Act’s Base Erosion and Anti-abuse Tax (BEAT) in 2017. The protocols approved by the committee are more narrow in scope and unaffected by the BEAT, so no reservations were required for them.

Senate Finance Committee Chairman Chuck Grassley and ranking member Ron Wyden this week urged Treasury Secretary Steven Mnuchin to intensify efforts to convince France not to enact a unilateral digital services tax while the Organisation for Economic Co-operation and Development continues efforts to find a multilateral solution to the digital taxation conundrum. In a 24 June letter to the Secretary, the senators called on the Administration to “consider all available tools under US law to address such targeted, discriminatory taxation,” including the imposition of Section 891. That provision allows for the doubling of rates of tax on citizens and corporations of certain foreign countries if the President finds that US citizens or corporations are being subjected to discriminatory or extraterritorial taxes. The US Government’s position is that various proposed unilateral digital taxes under consideration are targeted at US companies operating overseas.

A senior Internal Revenue Service official this week was quoted as saying that the proposed effective date for the “high taxed exclusion” in the proposed Global Intangible Low-taxed Income (GILTI) regulations was meant to provide taxpayers with the opportunity to assess how it would operate in practice. The proposed GILTI regulations would generally allow taxpayers to elect a narrow “high-tax exception” that would exclude from a US shareholder’s GILTI inclusion items of income of its controlled foreign corporations that would otherwise be part of the GILTI inclusion. The exception would apply if the items are subject to foreign income tax at an effective rate that is greater than 90% of the maximum income tax rate under Internal Revenue Code Section 11 (currently 21%, so a foreign effective tax rate greater than 18.9%). The proposed GILTI regulations, which were released alongside the final GILTI regulations on 14 June, would apply prospectively to tax years of a foreign corporation beginning on or after the date final regulations are published in the Federal Register.

The official was quoted as saying the proposed GILTI regulations would be finalized “pretty expeditiously.”

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

Ernst & Young LLP, International Tax Services, Washington, DC
  • Arlene Fitzpatrick |
  • Joshua Ruland |



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 Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more