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17 January 2025 Report on recent US international tax developments - 17 January 2025 President-elect Trump will become the 47th President of the United States on 20 January, ushering in a new administration. In regard to taxation, debate continues over the number and sequencing of budget reconciliation bills. Decisions regarding revenue targets, the mix of revenue proposals and spending cuts to offset the cost of TCJA extensions, plus addressing the President-elect's campaign promises, are among the many issues that will need to be resolved. House Speaker Mike Johnson (R-LA) reportedly has also shifted his timeline for the reconciliation process back slightly and wants the House to adopt a budget resolution by the end of February and a reconciliation package before Easter, on 20 April. The House passed the United States-Taiwan Expedited Double-Tax Relief Act (H.R. 33) on 15 January in a 423-1 vote. The bill would provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States and authorize the negotiation of a tax agreement. The legislation now moves to the Senate. Treasury and IRS officials this week addressed the issue of additional corporate alternative minimum tax (CAMT) guidance. The government released voluminous proposed CAMT rules in September of last year that were followed by a technical corrections package on 23 December 2024. While a senior Treasury official would not confirm the government will issue interim guidance on some of the CAMT partnership provisions before final regulations are issued, she said the government is cognizant that there are open questions with respect to operating rules, applicability dates and other provisions. Another Treasury official was quoted as saying there is "very good rationale" for amending the proposed CAMT rules in regard to the double counting of a company's earnings acquired from a consolidated group. He also said final CAMT regulations could address the IRC Section 381 area. The IRS on 14 January published on its website a Joint Statement by the US and French competent authorities on implementation of the spontaneous exchange of country-by-country (CbC) reports for fiscal years beginning in 2024 and 2025. The statement indicates the two countries are currently negotiating a competent authority arrangement for the automatic exchange of CbC reports. In the interim, the competent authorities will exchange multinationals' CbC reports for fiscal years beginning on or after 1 January 2024 and before 1 January 2026, based on Article 27 of the US-France income tax treaty. In a prerecorded statement at a Washington DC conference, Treasury's outgoing BEPS negotiator this week said that technical work is continuing on a permanent safe harbor for the Pillar Two global minimum tax for in-scope multinationals. He said the proposed safe harbor would provide "a simplified set of computations that would give taxpayers certainty that they won't be subject to a top-up tax on their profits in certain high-tax jurisdictions, while ensuring that the overall integrity of the Pillar Two system is upheld." During a House Ways & Means Committee hearing on 14 January titled "The Need to Make Permanent the Trump Tax Cuts for Working Families," committee member Ron Estes (R-KS) discussed an op-ed he wrote for the UK newspaper, The Telegraph, expressing concern that the OECD is working very hard to finalize Pillar Two guidance before the change of administrations next week. In the op-ed, he wrote regarding the BEPS project, "Our allies will be best served by partnering with the incoming administration, not the one halfway out the door." The co-chairs of the OECD Inclusive Framework (IF) on 13 January released a statement on the current status of negotiations regarding both Amount A and Amount B of Pillar One. Although consensus has not yet been reached on either the Multilateral Convention to implement Amount A or an Amount B Framework that would require jurisdictions to apply Amount B in specified circumstances, the statement indicates that progress has been made and work is continuing. The statement sets out some of the outstanding issues that are close to resolution. A senior official in the OECD Centre for Tax Policy also provided an update this week on certain ongoing BEPS project priorities. The official was quoted as saying the OECD is compiling a list of related-party transactions that may be used to circumvent the Pillar Two global minimum tax rules. The transactions broadly fall into three categories: (1) so-called "disappearing income;" (2) shifting income to get around the global anti-base erosion (GloBE) rules; and (3) using de minimis taxes to avoid the GloBE top-up tax. The IF on 15 January released three packages of BEPS 2.0 Pillar Two Administrative Guidance on the global minimum tax. The guidance includes a compilation of qualified legislation and information filing and exchange tools. The guidance on legislation is the so-called peer-review list. Global Tax Alerts on the OECD developments are forthcoming.
Document ID: 2025-0270 | ||||