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September 20, 2019
2019-6165

Report on recent US international tax developments 20 September 2019

The United States (US) Treasury on 16 September sent the eagerly-anticipated final Internal Revenue Code1 Section 59A Base Erosion and Anti-abuse Tax (BEAT) regulations to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) for review. At the same time, Treasury also sent a new package of proposed BEAT regulations to OIRA for review. The Government released comprehensive proposed BEAT regulations in December 2018, which addressed certain of the outstanding questions under Section 59A, and provided guidance on the application of the gating thresholds and computational matters.

The Internal Revenue Service (IRS) reportedly is considering ending its compliance campaign on nonfilers of Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation.” The campaign, one of the first compliance campaigns to be promulgated by the agency in 2017, has come under criticism by the Treasury Inspector General for Tax Administration (TIGTA). The TIGTA found “low examination referral and proposed assessment rates” resulting from the campaign. According to a TIGTA report released on 16 September, the IRS will evaluate whether the campaign should be amended or suspended entirely.

Pascal Saint-Amans, Director of the Organisation for Economic Co-operation and Development (OECD)’s Centre for Tax Policy and Administration, this week was quoted as saying that the OECD’s forthcoming proposals on Pillar 1 and Pillar 2 will incorporate tax certainty as a core part of the solution. A unified proposal is expected to be released by the OECD in late September or early October, prior to a planned G-20 Finance Ministers meeting expected to take place around a mid-October International Monetary Fund/World Bank meeting in Washington, DC.

Endnote

1. All “Section” references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.

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

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

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