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

November 24, 2021
2021-6248

Report on recent US international tax developments – 24 November 2021

The United States (US) and Turkey issued a joint statement on 22 November announcing that the same terms in the Unilateral Measures Compromise reached in October 2021 among the US and five European countries with respect to digital services taxes (DSTs) and US trade actions, would also apply in the US-Turkey context.

On 21 October 2021, a Joint Statement from Austria, France, Italy, Spain, the United Kingdom and the US was released describing a compromise reached by the countries on a transitional approach to the treatment of existing DSTs and other relevant similar measures during the interim period before new BEPS1 Pillar One rules come into effect. The interim period is the period beginning on 1 January 2022 and ending on the earlier of the date that the Pillar One multilateral convention comes into force or 31 December 2023.

Under the October compromise, the five European countries – and now Turkey, while not required to withdraw their existing DST regimes until Pillar One takes effect, have agreed to allow a portion of taxes accrued by a multinational enterprise under their DSTs or any other unilateral measures before Pillar One takes effect to be credited against the portion of the corporate tax liability associated with Amount A as computed under Pillar One.

The US Government, in turn, agreed to terminate its proposed trade actions against the countries with respect to the existing DSTs and committed not to impose further trade actions with respect to such countries and their DSTs during this interim period.

G20 leaders’ endorsement at the end of October 2021 of the Inclusive Framework agreement on key parameters of the BEPS 2.0 project is requiring swift action to ensure that the new rules come into effect globally as soon as possible. Grace Perez-Navarro, deputy director of the OECD's2 Center for Tax Policy and Administration, on 18 November was quoted as saying the OECD is committed to having both BEPS Pillars in effect by the end of 2023. The OECD official said this will require the Pillar One multilateral convention to be completed by mid-2022.

Earlier, officials said model rules on the BEPS Pillar Two 15% global minimum tax framework were expected to be released by the end of November. Global minimum tax legislation is already pending in in the US Congress in the proposed Build Back Better Act, and work has begun on a European Union directive on global minimum tax rules.

The US House and Senate are out of session this week for the Thanksgiving holiday. The Senate is expected to turn to the proposed House-passed Build Back Better Act sometime after it reconvenes following the holiday.

_________________________________________

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. Base Erosion and Profit Shifting.

  2. Organisation for Economic Co-operation and Development.

 
 

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