February 17, 2023
Report on recent US international tax developments – 17 February 2023
The United States (US) Internal Revenue Service (IRS) will not release proposed regulations on previously taxed earnings and profits (PTEP) until the latter half of 2023, according to an IRS official this week. The Government has announced delays in the release of the eagerly anticipated regulatory package on several occasions, most recently last fall. The official was quoted as saying the complex guidance will be released over a period of years in multiple packages and warned taxpayers that while this year’s regulations would address pressing concerns, taxpayers would not see all their questions answered in the first tranche.
US Senate Finance Committee member Sherrod Brown and Chairman Ron Wyden introduced the Stock Buyback Accountability Act of 2023, which would increase the recently enacted one percent stock buyback excise tax to four percent. In the 7 February State of the Union Address, President Joe Biden called for quadrupling the buyback excise tax that was included in the Inflation Reduction Act. The proposal is unlikely to be enacted in a divided Congress.
The press is reporting that the proposed US-Chile tax treaty is stalled due to disagreement among Senate Finance Committee Republicans and Treasury on the issue of foreign tax credits. Committee Republicans reportedly want clarification in treaty language that US companies will not face double taxation in certain situations. The Senate Foreign Relations Committee cleared the proposed US-Chile tax treaty in the last Congress, although it was not brought to the floor of the Senate for a vote. The treaty therefore must again go through committee approval in the new 118th Congress.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC