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June 11, 2021

Report on recent US international tax developments 11 June 2021

Bipartisan infrastructure talks between President Joe Biden and Senate Environment & Public Works Ranking Member Shelley Moore Capito and other Republicans ended on 8 June when the President suspended negotiations without a deal. The focus of infrastructure talks then shifted to a separate Senate bipartisan group that included Senators Joe Manchin and Mitt Romney, which on 10 June announced that they had reached a tentative infrastructure deal. Although few details are available, the Senators reportedly agreed to a US$1.2 trillion1 infrastructure package, but with $579 billion of that in new funding. The proposed infrastructure plan “would be fully paid for and not include tax increases,” according to a statement from Senator Rob Portman, a member of the group. The package has now gone to the Senate Republican conference and the Biden Administration to see if there is broader agreement on the proposed deal. At the time of publication of the Alert, the President has not commented on the new infrastructure proposal.

On the House side, the bipartisan Problem Solvers Caucus on 9 June released an eight-year $1.25 trillion infrastructure proposal. It is not clear how closely the House Problem Solvers infrastructure proposal parallels the latest Senate proposal.

G-7 Finance Ministers and Central Bank Governors issued a communiqué following their 4-5 June meeting that, among other things, expressed strong support for the ongoing work on the G20/OECD2 BEPS3 2.0 project. As expected, the G-7 committed to “reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises.“ The G-7 also called for the removal of all Digital Services Taxes (DSTs) and other relevant similar measures on all companies, and committed to a global minimum tax of at least 15% on a country by country basis.

Current activity in the BEPS 2.0 project is now focused on efforts to reach conceptual agreement in the Inclusive Framework on both Pillar One and Pillar Two before the 9-10 July 2021 meeting of the G20 Finance Ministers and Central Bank Governors, and to finalize that agreement in connection with G20 meetings in October. The specific parameters reflected in the G7 communiqué with respect to profit allocation and coordination with DSTs under Pillar One and with respect to the global minimum tax rate under Pillar Two are matters that are the subject of intensive negotiations in the 139-member Inclusive Framework. It remains to be seen what specifics will be included in any agreement that is reached in the Inclusive Framework.

A Treasury official this week was quoted as saying that the Biden Administration’s proposed 15% minimum tax on book earnings could include a requirement for companies to publicly disclose book-tax differences. Responding to criticism of the proposed minimum tax, the official said it should be seen as a backstop to the corporate tax system, adding “We’ve really thought through the contours of this proposal.”

According to the recently released Green Book, companies with a calculated base in excess of $2 billion would make an additional payment to the Internal Revenue Service (IRS) for the excess of up to 15% on their book income over their regular tax liability. Companies would be given credit for taxes paid above the minimum book-tax threshold in prior years, for book net operating loss deductions, for general business tax credits and for foreign tax credits.

Treasury and the IRS on 10 June issued Notice 2021-36, announcing the Government’s plans to amend the Base Erosion and Anti-abuse Tax (BEAT) final regulations under Internal Revenue Code4 Sections 59A and Section 6038A with respect to qualified derivative payment (QDP) reporting. The Notice defers the applicability date of certain provisions relating to QDP reporting until taxable years beginning on or after 1 January 2023. The IRS issued final and proposed BEAT regulations in December 2019 and additional final regulations in October 2020. The preamble to the latter regulations noted a public comment requesting that the Government address the interaction of the QDP, the BEAT netting rule and QDP reporting requirements found in the 2019 final regulations. Treasury and IRS are continuing to study the issue and therefore are extending the transition period.

Treasury has released a document that discusses information reporting proposals with regard to virtual currencies (including cryptocurrency). The proposals call for using existing tax regimes “by treating certain virtual currency similarly to other similar assets, as appropriate.” The document specifically looks to using Section 6045 (Broker Reporting), 6050I (“Cash” Reporting) and Section 6038D (Specified Foreign Financial Asset Reporting) in the virtual currency area. According to Treasury, these proposals would complement “the Administration's proposal to require information reporting by financial institutions.”


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

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



  1. Currency references in this Alert are to the US$.
  2. Organisation for Economic Co-operation and Development.
  3. Base Erosion and Profit Shifting.
  4. All “Section” references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.

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.


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