The United States (US) Congress returned to Washington this week from its spring recess with Democrats questioning whether limited budget reconciliation legislation is possible and, if so, what would be its parameters. Senator Joe Manchin has expressed some interest in a climate-focused reconciliation bill that also addresses tax changes and deficit reduction. Senator Manchin is now also separately holding meetings to explore whether some version of an energy bill could be enacted on a bipartisan basis, outside of the reconciliation process.
In regard to reconciliation, Senator Manchin offered some high-level clarity on 26 April when he outlined what he could support in terms of a scaled-back bill. Following a meeting with Senate Majority Leader Chuck Schumer, Senator Manchin was quoted as saying that any future budget reconciliation bill should be focused on reducing inflation, reducing the debt, and “getting a handle on what’s going on.” To that end, Senator Manchin indicated he supports changes to the tax code, including increasing the corporate tax rate to 25%, setting the capital gains rate at 28% and eliminating “loopholes” and “making sure everyone pays their fair share.” The prospects for any budget deal, however, remain uncertain.
Although there reportedly are discussions taking place among the Biden Administration and Congressional Democrats, Senator Manchin indicated there are no ongoing formal reconciliation negotiations at the present time.
The Organisation for Economic Co-operation and Development (OECD) on 25 April held a public consultation meeting on the Implementation Framework for the BEPS 2.0 Pillar Two Global Anti-Base Erosion (GloBE) Rules. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) sought input on four questions that were outlined in the invitation, which was released on 14 March 2022. The GloBE Rules and Commentary were released on the same day. The meeting focused on the mechanisms necessary to ensure that tax administrations and multinational enterprises can implement and apply the GloBE Rules in a consistent and coordinated manner. At the end of the session, the OECD Secretariat also addressed some technical questions related to the GloBE Rules.
According to the implementation plan released in October 2021, the GloBE Implementation Framework will be released by the end of 2022 at the latest. See EY Global Tax Alert, OECD holds public consultation meeting on Implementation Framework for Pillar Two GloBE Rules, dated 29 April 2022 for details.
The OECD has posted the public comments it received on the Draft Model Rules for Domestic Legislation on Scope under Pillar One.
EY also submitted a comment letter on the GloBE Implementation Framework under Pillar Two. The letter provides overall comments about the importance of a robust GloBE Implementation Framework and key matters to be considered in developing it.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
Arlene Fitzpatrick
Joshua Ruland
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
