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

April 23, 2021
2021-5478

Report on recent US international tax developments – 23 April 2021

United States (US) President Joe Biden will address a joint session of Congress on 28 April, where he is likely to make the case for Congress to act on his proposed US$2.2 trillion1 infrastructure plan which includes significant changes to the US international taxation regime. The President reportedly will also unveil details of his American Families Plan proposal to address health care, childcare, education, family leave and other issues. The “Families Plan” reportedly will include roughly $1 trillion in spending and $500 billion in new tax credits, with the cost generally paid for with new tax increases on higher income US taxpayers and investors. According to press reports, the President will propose raising the top individual tax rate and tax rate on capital gains to 39.6%.

Senate Finance Committee Chairman Ron Wyden on 21 April reintroduced the Clean Energy for America Act, which proposes to eliminate fossil fuel tax incentives and replace the dozens of energy tax incentives currently in the Internal Revenue Code with a simpler set of provisions that encourage clean electricity and transportation and energy efficiency. The bill would provide an emissions-based, technology-neutral tax credit for clean electricity production and investments in grid improvements like stand-alone energy storage and high-capacity transmission lines qualifying for the full-value investment tax credit.

For fossil fuels, the bill reinstates the current taxation of multinational oil companies’ non-extraction income and “ensures multinational oil companies are not specially exempted from the 2017 tax law’s global minimum tax.”

The United Nations (UN) Committee of Experts on International Cooperation in Tax Matters on 20 April approved the final text of a new digital taxation article for the UN Model Treaty that would allow for source country taxation of revenue from certain automated digital services. New Article 12B (Income from Automated Digital Services) would allow a contracting state to tax gross automated digital services income earned by a beneficial owner that is resident in the other contracting state. The new provision would also provide an option to be taxed on a net basis. Automated digital services is defined as “any service provided on the Internet or another electronic network, in either case requiring minimal human involvement from the service provider” and includes online advertising services, online search engines, digital content services, online gaming, and cloud computing services. New Article 12B does not specify specific tax rates, which would be established through bilateral negotiations.

_________________________________________

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

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

_________________________________________

Endnotes

  1. Currency references in this Alert are to the US$.
 
 

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