| | This week's tax news from the Americas - United States Treasury issues final, temporary and proposed IRC Section 892 regulations on the taxation of foreign governments' US investment income
On 15 December 2025, the US Treasury Department and IRS issued long-awaited final regulations (TD 10042) along with temporary and proposed regulations (REG-101952-24) (proposed regulations), under IRC Section 892. The final regulations follow the general approach of 2011 proposed regulations and include clarifications on when a foreign government is considered to have effective control over an entity and when its ownership of a partnership interest will be considered engagement in commercial activities. The proposed regulations include new rules on when the acquisition of debt by a foreign government is considered to be commercial activity, and when a foreign government is considered to have "effective control" over an entity for purposes of determining whether the entity is a controlled commercial entity.
- Argentina updates transfer pricing penalties for noncompliance with formal obligations
On 2 January 2026, Argentina published, in the Official Gazette, Law 27,799 (the Law), which introduces modifications to the Tax Procedure Law (Law 11,683 and its amendments). The Law, in part, revises the fines imposed for noncompliance with the transfer pricing formal obligations. For example, penalties for failing to submit transfer pricing returns have increased from ARS20k to ARS22m (approx. US$15k) per form; and for failing to file the first or second notification of the country-by-country report, the new range is from ARS6m to ARS15m (approx. US$4k to US$10k).
- United States | IRS notice outlines how to allocate foreign taxes and recognize certain foreign currency gains losses after OBBBA's repeal of one-month deferral election
In Notice 2025-72 (the Notice, released November 25, 2025), the US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced they will propose regulations to address the possible mismatch of income with the related foreign taxes, and the disproportionate recognition of certain foreign currency gains and losses, in short tax years resulting from repeal of the election under former IRC Section 898(c)(2) by the One, Big, Beautiful Bill Act (OBBBA). For affected taxpayers, the regulations would allocate foreign taxes between the OBBBA-created short tax year and the succeeding tax year. In addition, certain foreign currency gains and losses under IRC Section 987 would be recognized ratably for any OBBBA-created short tax year based on the number of months in the year.
- Colombian Government establishes temporary taxes amid State of Economic Emergency
On 29 December 2025, Colombia's Executive Branch issued Decree 1474, introducing temporary tax measures to address a fiscal gap, including higher taxes for some taxpayers (particularly in the financial and extracting sectors), higher equity taxes and additional indirect taxes (value-added tax and excise tax) on certain goods and services. The decree also includes provisions on how taxpayers may be able to conclude certain tax controversies by paying reduced tax penalties and interest. These tax measures are effective during 2026.
- OECD releases Side-by-Side Package on Pillar Two Global Minimum Tax: First impressions
On 5 January 2026, the Organisation for Economic Co-operation and Development (OECD) announced a political and technical agreement by the Inclusive Framework on a substantial package of Administrative Guidance related to the Pillar Two global minimum tax. The Package includes a new simplified-effective-tax-rate safe harbor, a one-year extension of the transitional country-by-country reporting safe harbor, a new substance-based tax incentive safe harbor and two safe harbors related to a side-by-side system. This Administrative Guidance will be incorporated into the Commentary to the Global Anti-Base Erosion (GloBE) Model Rules. Jurisdictions that have incorporated Pillar Two rules into their domestic law will need to implement these safe harbors.
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| | About Americas Tax Roundup Published by NTD's Tax Technical Knowledge Services Group, Washington, D.C.
Jennifer Mannetta, writer and editor Distributed weekly to all Americas Tax personnel. | |
