The tax authorities in the United States have been busy on the international tax front. On April 16, 2020, the United States Internal Revenue Service issued a set of frequently asked questions and answers to help inform taxpayers about transfer pricing documentation best practices.

The six new FAQs deal with topics such as the advantages of preparing and providing “robust” transfer pricing documentation; the IRS’s guiding principle in establishing whether arm’s-length prices were charged in intercompany transactions; areas that the IRS has identified in transfer pricing documentation reports that could benefit from improvement; and examples of a presentation of a company’s intercompany transactions for examiners to use in summary when preparing risk assessments.

The US Treasury Department and the IRS additionally recently issued for comment proposed guidance involving hybrid arrangements and the allocation of deductions attributable to certain disqualified payments under section 951A of the tax code, dealing with Global Intangible Low-Taxed Income.

In particular, the document contains proposed regulations that adjust hybrid deduction accounts to take into account earnings and profits of a controlled foreign corporation that are included in income by a United States shareholder.

Additionally, the document contains proposed regulations that address, for purposes of the conduit financing rules, arrangements involving equity interests that give rise to deductions (or similar benefits) under foreign law.

Further, the document includes proposed regulations relating to the treatment of certain payments under the GILTI rules.

For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look

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