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

October 1, 2021
2021-6013

Report on recent US international tax developments – 1 October 2021

House Democratic leaders late on 30 September postponed a floor vote on the Senate-passed infrastructure bill, acknowledging they did not have the votes to pass the legislation. Congressional Democrats and the White House this week had sought to reach agreement on a framework for a budget reconciliation bill that would convince progressive House Democrats to vote for the infrastructure bill, but no deal came to fruition. The stalemate comes as progressive Democrats are trying to push forward on a US$3.5 trillion1 “human infrastructure” reconciliation bill but are stymied by Congressional Democratic moderates who are seeking a smaller bill.

The negotiation over a budget reconciliation framework was further complicated when leading moderate Senator Joe Manchin on 30 September announced that he would support a $1.5 trillion budget reconciliation package, considerably smaller than the $3.5 trillion bill favored by progressives and included in the August budget resolution passed by both the House and Senate. In justifying his position, Sen. Manchin said he did not want “to change our whole society to an entitlement mentality.”

It was also disclosed that the Senator signed a memorandum of understanding with Senate Majority Leader Chuck Schumer at the end of July that included his $1.5 trillion spending limit, and that was a precondition for his support of the August budget resolution. Senator Manchin announced his top line number as progressive Democrats said they could not move forward on budget reconciliation without knowing what he and fellow Democratic moderate Senator Kyrsten Sinema would support. Senator Manchin, who had earlier suggested that a final reconciliation package should be delayed until 2022, also said that he could envision a budget reconciliation package being passed by the Congress this year.

The size and scope of the reconciliation bill ultimately will dictate the amount of pay-fors, including tax increases.

Speaker Nancy Pelosi said the House would vote on the infrastructure bill on 1 October, the third attempt this week.

G-7 Finance Ministers this week reportedly reached agreement on some of the outstanding issues surrounding the Base Erosion and Profit Shifting (BEPS) 2.0 Pillar One and Pillar Two reform proposals. The Inclusive Framework on BEPS is scheduled to meet on 8 October with the aim of reaching final agreement on the BEPS Pillars. Assuming agreement is reached and an implementation plan is finalized, G-20 Finance Ministers will be in a position to approve the plan at their 12-13 October meeting in Washington. A G-20 Finance Ministers summit is also scheduled for 30-31 October in Rome.

The United States (US) Treasury also confirmed that progress had been made on BEPS 2.0 at the G-7 meeting. According to the Treasury September 29 readout, “A common understanding was reached on some of the important open issues, to support reaching final political agreement within the OECD Inclusive Framework in October.”

In regard to Pillar One, Treasury Secretary Janet Yellen told a Senate Banking, Housing, and Urban Affairs Committee hearing on 28 September that she thought that US implementation of Pillar One may not require a treaty and ensuing Senate assent and ratification. “I believe there are a number of ways in which Congress could implement it. . . . Ratification of a treaty would be one way,” the Treasury Secretary said. Secretary Yellen earlier had said the Biden Administration may look to begin implementing Pillar One in spring 2022.

The Internal Revenue Service this week issued Rev. Proc. 2021-32, listing those jurisdictions with which the US Government has an information exchange agreement for purposes of reporting certain deposit interest paid to those jurisdictions. The reporting requirement is found in Reg. Sections 1.6049-4(b)(5) and 1.6049-8(a). The revenue procedure also lists those jurisdictions with which there would be automatic exchange of the deposit interest information collected.

_________________________________________

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