International Tax Services Washington Dispatch, September 2019

In this episode, our ITS team looks at the entry-into-force dates of tax protocols between the US and Japan, Spain, Luxembourg and Switzerland.

Related topics Tax

This edition of the ITS Washington Dispatch for September explores, in detail, the establishment of entry-into-force dates for the tax protocol agreements between the US and Japan, Spain, Luxembourg and Switzerland and the implications of each.

There’s a look at the new IRS proposed regulations on Section 382 and how built-in gains and losses are calculated, potentially to the detriment of the taxpayer, and an examination of the US’s expected tax reform guidance due by Fall 2019.

Finally, there’s a look at the IRS’ campaign against non-filers of Form 1120-F and news on the decision reached regarding the Netherland’s perceived state aid for Starbucks.

This EY monthly update begins with a look at the entry-into-force dates of tax protocols between the US and Japan, Spain, Luxembourg and Switzerland. All four agreements have been stalled in the Senate for a number of years, but have now been approved and dates have been set for them to be entered into force, with three of them now active and Spain’s coming in November.

The IRS has issued proposed regulations under Section 382 on the items of income and deductions that are included in calculating built-in gains and losses under Section 382(h) and reflecting changes to the code made by the Tax Cuts and Jobs Act. If these are finalized, they will see sweeping changes and will offer less taxpayer-favorable determinations of recognized built-in gain as it would eliminate the 338 approach.

Additionally, the US government is now expected to deliver more international tax reform guidance by the Fall of 2019. Numerous international tax-related and tax cuts projects, in both final or proposed form, are expected to be released, particularly around the application of the Base Erosion and Anti-Abuse Tax (BEAT).

The IRS is reportedly considering ending its campaign against non-filers of the 1120-F Form, US Income Tax Return of a Foreign Corporation. The campaign has been criticized by the Treasury Inspector General for Tax Administration, who found low examination referral and proposed assessment rates resulting from the campaign.

Finally, there are updates on the Netherlands’ perceived state aid for Starbucks and the OECD’s first Tax Certainty Day.

Learning outcomes

  • Exploring the confirmed entry-into-force dates of the US tax protocol agreements with Japan, Spain, Luxembourg and Switzerland and what each protocol covers
  • Understanding proposed new regulations from the IRS on determining built-in gains and losses under Section 382
  • Looking at the international guidance on tax reform to be issued around the application of BEAT
  • View at a top-level the failures of the IRS’ campaign against non-filers of the 1120-F Form and the criticism it received

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Duration 13m 57s

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