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April 22, 2022
2022-5418

Report on recent US international tax developments 22 April 2022

The United States (US) Congress returns next week from its spring recess amid speculation that Democrats may make one last attempt to pass pared-down budget reconciliation legislation before the August recess. There are mixed signals about a post-Build Back Better Act reconciliation bill, with some senators suggesting a package would need to come together by Memorial Day. Among the complicating factors are differences between Senators Kyrsten Sinema's and Joe Manchin's tax positions  – Senator Sinema opposes tax rate increases – and uncertainty over whether both Senators Manchin and Sinema want an agreement.

A senior Treasury official this week said the Biden Administration views both the Treasury Greenbook’s repeal of the base erosion and anti-abuse tax (BEAT) and replacement with an undertaxed profits rule (UTPR) and the House-passed Build Back Better Act’s (HR 5376) BEAT corrections as furthering the OECD’s1 BEPS2 2.0 Pillar Two global minimum tax proposal. The official was quoted as saying the Administration “fully supports the BEAT reforms in the House-passed bill.” According to the official: “Both the green book UTPR proposal and the House BEAT reforms would create powerful incentives for other countries to join and comply with the new global regime, and both further the goals of it.”

The Treasury official also confirmed the Administration remains confident that Congress will pass international tax reform and that the US will meet its commitment to reform the global intangible low-taxed income (GILTI) and BEAT “which remains a top priority for the Administration.”

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

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

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Endnotes

  1. Organisation for Economic Co-operation and Development.

  2. Base Erosion and Profit Shifting.

 
 

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