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

June 16, 2023
2023-5506

Report on recent US international tax developments - 16 June 2023

The US House Ways and Means Committee on 13 June approved three separate tax packages: the Tax Cuts for Working Families Act, Small Business Jobs Act, and Build It in America Act, following a 10-hour markup. The three bills, combined into the American Families and Jobs Act, fulfill Chairman Jason Smith's (R-MO) commitment to develop a tax-based economic package. According to some press reports, House Republicans are looking to bring the tax package to the House floor for a vote as early as the week of 19 June, although there are obstacles. If that does not happen, the package will come before the House sometime after the 4 July holiday.

The bills are not expected to be enacted in their current form, given that the Tax Creation and Jobs Act "pre-cliffs" relating to expensing of R&D costs, interest deduction limitations under IRC Section 163(j), and 100% expensing of manufacturing equipment remain stalled as Democrats insist on expanding the Child Tax Credit. Democrats also strongly oppose rolling back clean energy provisions from the Inflation Reduction Act that Republicans hope to use as revenue offsets for the released tax package.

There is some speculation that this week's proposed tax legislation could represent the House GOP's starting position for talks later this year aimed at putting together a year-end tax extenders package.

The proposed US-Chile income tax treaty may come to the Senate floor for a final vote as early as 21 June, according to reports. The long-stalled 2010 tax convention was reported out of the Senate Foreign Relations Committee on 6 June. If a Senate vote does not take place next week, it is expected to come before the Senate the following week.

Treasury this week announced in a Memorandum of Agreement (MOA) that tax regulations would no longer be reviewed by the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs, a practice established under the Trump Administration. In April 2018, a prior MOA created a new framework for the review of certain tax regulations (above $100 million annual non-revenue economic impact) that was intended to increase economic analysis and review of tax rules. That added level of review established a new layer of input (and delay, according to critics) in the regulatory process.

In OECD news, the co-chair of the Inclusive Framework (IF) this week was quoted as saying the IF is committed to finalizing the Multilateral Convention (MLC) within the earlier-announced timeline of concluding negotiations before the end of July to open the agreement for signature. The OECD in December 2022 released draft MLC provisions on Digital Services Taxes and other relevant similar measures in connection with Amount A of BEPS 2.0 Pillar One.

According to the official, negotiators are still grappling with the treatment of withholding taxes in Amount A, with the issue being whether withholding taxes should be considered in the marketing and distribution safe harbor. Developing countries are suggesting that including withholding taxes in the safe harbor computation could adversely affect them.

Another OECD official, Achim Pross, deputy director of the Centre for Tax Policy and Administration's international cooperation and tax administration division, this week said that as countries implement global minimum tax rules, it may be time to consider amending or eliminating certain duplicative anti-avoidance rules, such as certain CFC regimes.

____________________________

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

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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 
 

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 © 2024, 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 Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more