April 15, 2022
Report on recent US international tax developments – 15 April 2022
United States (US) Treasury Secretary Janet Yellen this week made the pitch that implementation of the Base Erosion and Profit Shifting (BEPS) 2.0 framework will help global economies recover from the dual challenges of the COVID-19 pandemic and the war in Ukraine. Secretary Yellen further said in a 13 April speech: “This tax deal is necessary to end the race to the bottom in corporate taxes and to reform profit reallocation rules that, by demanding a physical nexus to a taxing jurisdiction, no longer reflect modern economic realities.” She added that “by ensuring that profitable corporations pay their fair share and operate on a level playing field, the [BEPS 2.0] deal will provide governments around the world the resources they need to invest in their people and economies.” The comments were made ahead of a G-20 Finance Ministers meeting taking place during an upcoming International Monetary Fund/World Bank meeting on 18-23 April.
The US Internal Revenue Service (IRS) this week released eight new Schedules K-2 and K-3 Frequently Asked Questions (FAQs) (Forms 1065, 1120S, and 8865). The FAQs add to previously issued FAQs issued in February. Schedules K-2 and K-3 are new reporting forms that pass-through entities generally must complete, beginning in the 2021 tax year. According to the IRS, the new schedules K-2 and K-3 “improve reporting by standardizing international tax information to partners and flow-through investors, making it easier for them to report these items on their tax returns.”
The US Senate Foreign Relations Committee has released its report on the proposed 2010 US-Chile income tax treaty. The committee reported the treaty out of committee favorably with two reservations and one declaration. The committee recommended that the Senate give its advice and consent to ratification of the convention, as explained in the report.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC