The US Internal Revenue Service has reminded overseas taxpayers living and working abroad that they have an extra month to file their 2019 federal income tax return and pay any tax due. This includes Americans who live and work abroad, non-resident aliens and foreign entities with a US filing and payment requirement.
The deadline for these taxpayers is normally June 15. However, it has been extended to July 15 as part of the various COVID-19-related tax relief measures announced by the Treasury Department and the IRS in April 2020.
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
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 … Read More »
On February 14, 2020, AmCham EU, the representative body for American business in the European Union, wrote a request for greater transparency on the progress of the 2021 VAT e-commerce package and its implementation.
The reforms, agreed by EU member states on March 12, 2019, are intended to simplify VAT rules for goods sold online and introduce new obligations on online marketplaces to require them to contribute in the fight against tax fraud.
Under the changes, due to be implemented on January 1, 2021, online marketplaces will be considered to act as the seller when they facilitate sales of goods with a value up to EUR150 (USD162) to customers in the EU by non-EU businesses using their platform. The same rules will apply when non-EU businesses use online platforms to sell goods from “fulfillment centers” in the EU, irrespective of their value, … Read More »
The United States Internal Revenue Service has issued final regulations and proposed regulations on the base erosion and anti-abuse tax (BEAT) under section 59A of the tax code, which provide guidance for taxpayers affected by the tax provision.
Added to the tax code by the Tax Cuts and Jobs Act of 2017, the BEAT is designed to penalize those companies that make deductible payments to foreign affiliates to substantially reduce their exposure to US taxation. The BEAT is calculated by adding back certain deductible payments made to foreign affiliates and applying a minimum tax to a percentage of the difference between the taxpayer’s modified taxable income and their regular tax liability, at a rate of five percent for 2018, 10 percent from 2019, and 12.5 percent from 2025.
The provision primarily affects corporate taxpayers with gross receipts averaging more than USD500m over … Read More »
In late November, the US IRS announced that the Foreign Account Tax Compliance Act (FATCA) International Data Exchange Service (IDES) would be opening for testing in December.
FATCA, which was enacted by the US Congress in 2010 and took effect on July 1, 2014, is intended to ensure that the IRS obtains information on financial accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
US persons are also required to report, depending on the value, their foreign financial accounts and foreign assets.
The FATCA IDES is an electronic delivery point where financial institutions and host country tax authorities can securely transmit and exchange FATCA data with the United States. The data is in a standard XML … Read More »
The House of Representatives has approved bipartisan legislation that would require certain new and existing small corporations and limited liability companies to disclose information about their beneficial owners.
The bill, known as the Corporate Transparency Act of 2019, was sponsored by Carolyn B. Maloney (D-NY) and co-sponsored by Peter King (R-NY) and Tom Malinowski (D-NJ).
Under the proposed legislation, certain entities applying to form a corporation or limited liability company would have to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). Additionally, certain existing corporations and limited liability companies would have to file this information with FinCEN two years after the implementation of final regulations required under the bill.
The bill defines a beneficial owner as an individual who:
exercises substantial control over a corporation or limited liability company;
owns 25 percent or more of the interest in a corporation or limited … Read More »
The Governments of France and the United States are reportedly close to settling a dispute surrounding France’s digital services tax.
The US President had said that he intended to announce new tariffs on imports of French wine in response to the newly introduced French DST, which the US Government argued unfairly discriminates against US companies.
The French DST imposes a three percent tax rate on the revenue of digital companies providing advertising services, selling user data for advertising purposes, or performing intermediation services. Companies with global revenues of EUR750m (USD835m) or more and French sales of at least EUR25m are required to pay the tax.
The tax, approved by the French Parliament on July 11, 2019, will to apply to turnover realized in France since January 1, 2019, and is expected to affect around 30 companies supplying digital services in France.
The Office of … Read More »
The US Treasury Department and the Internal Revenue Service (IRS) have issued final regulations concerning the global intangible low-taxed income (GILTI) regime under Section 951A, as well as final and proposed regulations concerning foreign tax credits, domestic partnerships, subpart F income, and the treatment of certain controlled foreign corporation (CFC) income.
According to the IRS, the final GILTI regulations provide guidance to determine the amount of global intangible low-taxed income included in the gross income of certain US shareholders of foreign corporations, including US shareholders who are members of a consolidated group.
The final GILTI regulations retain, with certain modifications, the anti-abuse provisions that were included in the proposed regulations and revise the domestic partnership provisions to adopt an aggregate approach for purposes of determining the amount of global intangible low-taxed income included in the gross income of a partnership’s partners under Section … Read More »
The United States is getting increasingly twitchy about European digital taxes, and especially the French measures. And retribution could be swift.
Members of the US Congress from both sides of the aisle have been queuing up to publicly condemn foreign digital taxes, which they say are a deliberate fiscal raid on a group of largely US-based companies. But their intervention on this subject is not altogether surprising, given that such statements are aimed in the direction of lawmakers’ constituents as much as the White House and foreign governments.
More worryingly for France and the EU though, is that the Administration itself is talking tough too. Recently, a senior Treasury official revealed to reporters that the department is actively exploring the deployment of countermeasures to the French and other digital measures under World Trade Organisation rules, and even the public face of the … Read More »
FATCA sneaked onto the statute book on 2010 after being tacked on to President Obama’s economic stimulus legislation, the HIRE Act. It is intended to ensure that all US citizens with interests in overseas bank accounts comply with US tax laws. That is a very simple overview of the law, though. To fully understand it (or, more likely, to be fully baffled by it), one would need to wade through hundreds of pages of legislation, regulations, guidance, inter-governmental agreements and advisory notices issued by the Internal Revenue Service. Alternatively, for a more rewarding experience, you could try wading through treacle instead.
The US Government is on something of a mission to reduce the administrative burden posed by FATCA on taxpayers and financial institutions – and probably itself. In December 2018, it announced proposed regulations intended to reduce the burden on taxpayers … Read More »