Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘FTC’

TCJA guidance

Treasury is now fairly confident that all TCJA guidance will be finalized by October 1st.

Treasury deputy assistant secretary for international tax affairs, Lafayette G. “Chip” Harter III, recently shared his ambitious agenda, including the following:

  • Section 901(m) regulations, imminent
  • Section 163(j) interest, OIRA received proposed regulations February 7th; final reg review is complete
  • FDII regulations, spring; documentation requirements have been reworked
  • GILTI regulations, summer
  • Foreign tax credit regulations and others, in the pipeline

 

  • Treaties with Chile, Hungary and Poland; may be reworked, as there are concerns that the BEAT violates Articles 23 (relief from double taxation) and 24 (nondiscrimination) of the U.S. model income tax treaty

US Int’l developments

The US developments are centered around the new regulations for BEAT and Foreign Tax Credit (FTC).

The new BEAT regulations include:

  • Excludes non-recognition transactions re: Sec. 332, 351, 355, and 368
  • Allows foregoing a deduction, albeit it will be for all US federal tax purposes
  • Clarifies anti-abuse rules

The final FTC regulations include:

  • Reducing previously taxed E&P baskets to 10, from 16
  • Gross tested income is tiered up for purposes of allocating interest expense
  • Foreign tax redeterminations are addressed
  • Foreign branch rules are detailed

Additionally, Section 987 regulations are deferred by another year.

EY’s Global Tax Alert details the latest developments.

Click to access 2019G_005410-19Gbl_German%20Federal%20Council%20approves%20Research%20Allowance%20Act.pdf

US FTC Regs: Overview

KPMG has provided a quick turnaround on the final and proposed Foreign Tax Credit regulations, linked for reference.

Click to access tnf-ftc-initial-impressions-dec3-2019.pdf

 

US BEAT/FTC Reg’s

Final and proposed Regulations were issued with respect to the Foreign Tax Credit and BEAT.  Noting this regulation package collectively amounts to over 650 pages, it will require time and attention to webcasts, etc. to fully understand the breadth of these rules, especially as they may pertain to 2018 and/or 2019.

Click to access td-9882.pdf

Click to access reg-105495-19.pdf

Click to access 2019-25744.pdf

Click to access 2019-25745.pdf

US: TCJA Reg chronology

Pending developments this year are focused on the Tax Cuts and Jobs Act (TCJA).

This week expectations – Final FTC Regs, final and proposed BEAT Regs

This year (maybe) – Final and proposed Sec. 163(j) Regs (currently at 550 pages)

This year/January 2020 – Sec 267A final and proposed Regs, Sec 863(b) sourcing proposed Regs

by June 30, 2020 – Final FDII regulations, GILTI high-tax exclusion, Sec 250 participation exemption

EY’s Global Tax Alert provides further details, including OECD developments reported on previously

Click to access 2019G_005186-19Gbl_Report%20on%20recent%20US%20intl%20tax%20developments%20-%2015%20Nov%202019.pdf

US: Int’l update/FTC Reg’s

  • The Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) completed its review of final and temporary foreign tax credit (FTC) regulations on 29 October, including R&D expense allocation.  These rules are imminent.
  • Final Sec. 385 regulations were issued, removing the final documentation requirements
  • Sec. 385 Advance Notice of Proposed Rulemaking was issued re: Distribution Regulations
  • The Congressional Joint Committee on Taxation staff released the General Explanation of Certain Tax Legislation Enacted in the 115th Congress (JCS-2-19) on 31 October. Colloquially known as the Blue Book, the publication includes a description of all tax legislation enacted in the 115th Congress, with the exception of the 2017 Tax Cuts and Jobs Act (Public Law 115-97), which was covered in a separate General Explanation released in December 2018.
  • A Brexit extension was approved this week, with the UK’s Article 50 period (after which the UK will leave the EU) legally extended by the EU until 31 January 2020.

EY’s Global Tax Alert provides more details, with a reference link.

The FTC regulations, to be issued in final and proposed form, will be complex, long and will provide certainty, as well as more questions into this complex area.

Click to access 2019G_004918-19Gbl_Report%20on%20recent%20US%20intl%20tax%20developments%20-%201%20Nov%202019.pdf

US: FTC Reg’s on the way

Final and proposed Foreign Tax Credit (FTC) regulations are in review by OMB’s Office of Information and Regulatory Affairs.

These regulations join the pending BEAT regulations in OIRA.

We should expect both sets of regulations in the very near future.

https://home.kpmg/us/en/home/insights/2019/10/tnf-regulations-pending-oira-review-foreign-tax-credit-guidance.html

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