September 29, 2023
Report on recent US international tax developments - 29 September 2023
The US Congress is continuing to take steps to pass a continuing resolution (CR) to extend government funding past the 30 September midnight deadline, but some members believe a shutdown of some sort seems inevitable. The potential for an agreement may come down to border security, which House Speaker Kevin McCarthy (R-CA) continues to press as an issue of wide support, and which is the subject of a bipartisan amendment under development in the Senate.
Margorie Rollinson, President Biden's pick to become IRS Chief Counsel and Treasury Assistant General Counsel, testified at her Senate Finance Committee confirmation hearing on 28 September. Rollinson spent most of her career at EY, retiring as EY Deputy Director of National Tax, and has held several senior positions at the IRS, including Associate Chief Counsel (International).
International tax was one area of focus for committee Republicans during the confirmation hearing. Ranking Member Mike Crapo (R-ID) said the Administration "invited foreign governments to pursue new discriminatory taxes against our companies in the form of the Undertaxed Profits Rule (UTPR), a surtax which also likely violates our existing bilateral tax treaties." According to Senator Crapo, a collateral consequence was that "Treasury must now exhaust precious resources issuing regulations to attempt to mitigate the double taxation it created by unilaterally committing to a global tax deal that undermines U.S. interests."
The timing for further action on the Rollinson nomination is not clear at this time.
A group of bipartisan members of the House Ways and Means Committee on 19 September sent a letter to Treasury Secretary Janet Yellen and US Trade Representative Katherine Tai expressing their disapproval of Canada's decision to move forward with plans to introduce a 3% Digital Services Tax (DST). The proposed Canadian DST would be effective 1 January 2024 and apply retroactively to 1 January 2022. The Committee members warned that the United States "would examine all options, including under our trade agreements and domestic statutes," if Canada introduces the DST.
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