US House Ways and Means Committee Chairman Richard Neal conceded this week that there is no consensus among Democrats in Congress on the approach to take in terms of United States (US) taxation of multinationals – some consider it a revenue source while others want to reexamine Tax Cuts and Jobs Act (TCJA) provisions. The Chairman added that in the end, “Congress will work closely with the administration to secure favorable outcomes for the U.S. businesses headquartered right here.”

On the topic of a corporate rate increase, Chairman Neal said harmonization of rates with the Organisation for Economic Co-operation and Development (OECD) makes some sense and, while nothing has been decided, the economic downturn “ought to cause us to be careful.” The Chairman also indicated that he objects to retroactive taxation and noted the importance of putting the pandemic and recession behind us.

He said it is clear after meeting with President Biden on 5 February that, as soon as the current round of coronavirus relief is put in place, Democrats plan to proceed with an infrastructure initiative that includes a revival of the Build America Bonds program.

Treasury Secretary Janet Yellen has suggested that a corporate tax rate increase to 28% could be proposed in what is expected to be the infrastructure-plus “Build Back Better” package, but the intention to pay for the bill has since become less certain. There are press reports that Biden Administration officials and congressional Democrats may be open to an infrastructure bill that does not include tax increases and is instead paid for with debt.

The Platform for Collaboration on Tax – a joint effort of the OECD, United Nations, International Monetary Fund and World Bank Group – recently released a toolkit designed to help developing countries with the successful implementation of effective transfer pricing documentation requirements. The toolkit compiles information on transfer pricing documentation and analyzes policy choices and legislative options. See EY Global Tax Alert, OECD, UN, IMF and World Bank Group present toolkit on the implementation of effective transfer pricing documentation requirements, dated 15 February 2021 for details. 

The OECD Forum on Tax Administration (FTA) on 18 February released a new handbook for the International Compliance Assurance Programme (ICAP), which for the first time is now open to all FTA administrations. The OECD describes ICAP as a voluntary program that provides for “coordinated risk assessment of large MNE groups by tax administrations in several jurisdictions using a group's Country-by-Country reports, master file, local files and other transfer pricing information.”

The OECD on 17 February also issued the 2021 Global Forum Capacity Building Report, laying out the Global Forum’s capacity-building program and outreach activities that were conducted in 2020. The Global Forum supports members “in tackling offshore tax evasion by monitoring, reviewing and assisting jurisdictions to implement international standards” related to tax transparency and exchange of information.

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

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC

• Arlene Fitzpatrick | arlene.fitzpatrick@ey.com
• Joshua Ruland | joshua.ruland@ey.com