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

July 22, 2022
2022-5699

Report on recent US international tax developments 22 July 2022

The future of any budget reconciliation bill this year remains in doubt as the United States (US) Congress closes in on the August recess. Late last week, President Joe Biden issued a statement in which he called on Congress to pass a prescription drug bill immediately and indicated he would take executive action to address climate change if Congress does not act. The White House statement was in response to Senator Joe Manchin indicating that he would not support a budget reconciliation bill that includes climate change and tax increases (including international tax changes) at this time, following the latest high US inflation report. Senator Manchin said he would support a prescription drug bill, however. Senator Manchin reportedly left open the possibility of his support for passage of a broader reconciliation bill in September, but only if economic conditions ease.

Notwithstanding the new budget reconciliation landscape following Senator Manchin’s announcement, some top Democrats are not ruling out a reconciliation bill with climate policies and tax increases. Senate Finance Committee Chairman Ron Wyden released a statement on 18 July saying, in part: “Conversations on clean energy must continue to preserve our options to move forward. Nearly all of the clean energy credits have already expired, and it will be difficult to extend them at the end of the year.” The press reported this week that Democrats are expected to move on prescription drug and Affordable Care Act subsidies before the August recess. There remains some hope in the Democratic caucus that if US inflation eases, there may yet be a possibility to enact climate provisions.

Senator Manchin also threw a wrench in regard to the Organisation for Economic Co-operation and Development (OECD)-led global tax agreement, when he said he took Global Intangible Low-Taxed Income (GILTI) changes that would bring it in line with the Base Erosion and Profit Shifting (BEPS) Pillar Two 15% minimum tax off the table during recent reconciliation negotiations. While Senator Manchin said he agreed with a 15% minimum corporate tax, US inflation was too high to risk raising taxes at this time. He suggested he would look to August’s inflation numbers before making a final decision on the matter. The White House meanwhile this week played down fears that the OECD global tax agreement was in jeopardy.

Treasury officially announced that the US Government on 8 July notified Hungary that it was terminating the US-Hungary tax treaty. According to the announcement, the treaty termination will be effective on 8 January 2023. Treaty termination provisions provide that the convention will cease to have effect with regard to withholding on 1 January 2024, and with respect to taxable periods beginning on or after 1 January 2024.

_________________________________________

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

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

 
 

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 © 2023, 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