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

March 31, 2023
2023-5393

Report on recent US international tax developments 31 March 2023

An Organisation for Economic Co-operation and Development (OECD) official this week said the organization is confident there will be an agreement on Amount B of Base Erosion and Profit Shifting (BEPS) Pillar One by the middle of this year. The official was quoted as saying that while there is overwhelming support among businesses to broaden the scope of Amount B, there are “natural limits to how broad the scope can be as well” and delegates are working on the right balance.

In December 2022, the OECD Secretariat released a consultation document on Amount B of Pillar One of the BEPS 2.0 project. Amount B is aimed at simplifying and streamlining the transfer pricing of in-country baseline marketing and distribution activities, while ensuring outputs are consistent with the arm’s-length principle. There is no threshold proposed for multinational enterprises (MNEs) to be within scope of Amount B; this is in contrast to both Amount A of Pillar One and the global minimum tax rules under Pillar Two, where specified thresholds would apply for determining whether an MNE is within scope.

The Internal Revenue Service (IRS) Advance Pricing and Mutual Agreement (APMA) Program this week issued its 24th annual Advance Pricing Agreement (APA) report in Announcement 2023-10. The report discusses APMA, including its activities and structure for calendar year 2022 and provides useful insights into the operation of the APA Program. Although the number of APA filings increased significantly in 2022, the total number of APAs concluded decreased significantly; the median amount of time to finalize an APA increased from 35.1 months in 2021 to 43.4 months in 2022. See EY Global Tax Alert, US IRS issues annual APA report for 2022 showing significant increase in number of APAs filed, dated 31 March 2023 for details.

House Republican tax writers sent a 24 March letter to the House Appropriations State, Foreign Operations and Related Programs Subcommittee requesting that funding to the OECD by the United States Government be eliminated. The 10 Ways and Means Committee members wrote that the organization has “evolved into a venue that advocates against the economic interests of United States’ workers and business … .” Senate Finance Committee Chairman Ron Wyden was quoted as saying he opposed the action.

_________________________________________

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