The United States tax treaty with Chile has finally been approved by the Senate, over a decade after its original signature on 4 February 2010.
On 22 June 2023, the Senate voted 95-2 to pass the resolution of advice and consent to ratification of the Convention Between the Government of the United States of America and the Government of the Republic of Chile for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital. The treaty now heads to the President for official ratification.

On 9 June 2023, the White House released a memorandum of agreement between the Treasury Department and the Office of Management and Budget, which clarifies that tax regulations will not be subject to review by the Office of Information and Regulatory Affairs and, in doing so, supersedes and essentially reverses a 2018 memorandum of agreement from the Trump administration.

In April 2023, the IRS issued its Inflation Reduction Act Strategic Operating Plan, which describes how the IRS intends to use the additional USD 80 billion in funding for fiscal years 2023 through 2031 provided by the Inflation Reduction Act.

On Tuesday, 20 December 2022, the OECD released a highly anticipated consultation document on Digital Services Taxes (DSTs) and relevant similar measures. This consultation document provides draft articles for inclusion in the Multilateral Convention to implement the agreement reached by members of the Inclusive Framework with respect to DSTs and relevant similar measures.

The semiconductor shortage is increasingly obvious, from the automotive industry to consumer electronics. In fact, the chip shortage has even been referenced as a potential matter of national security. H.R. 4346, better known as the CHIPs and Science Act, was signed into law by President Biden on 9 August 2022 and seeks to promote semiconductor supply chain resilience by establishing incentives to increase the production of microchips and related devices, including through an effectively refundable tax credit, as well as through other measures.

Baker McKenzie is pleased to launch the second in our Biden Supply Chain Policy video series focused on the semiconductor and advanced packaging supply chain. This is one of four critical supply chains that has been a particular focus of the Biden Administration’s supply chain policies. In this video, Baker McKenzie associates discuss the legal and compliance considerations for companies operating in this sector with a specific focus on tax, trade and foreign investment review implications.

In an era where supply chain disruptions and risks are regular front-page news, the Biden Administration has been undertaking a range of initiatives intended to create resilient supply chains that reflect the administration’s policies around national security, foreign policy, human rights and the US economy.

President Biden released his Administration’s budget proposal for fiscal year 2022 on 28 May 2021. To accompany the Administration’s Budget, the Treasury Department released its “General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals.

Generally, an affiliated group allocates and apportions its interest expense in determining foreign-source taxable income as if all members of the group are a single corporation. Only domestic corporations are included in the affiliated group with the result that a US-based multinational with a significant portion of its assets overseas is required to allocate a significant portion of its interest expense to foreign-source income. This may cause an over-allocation of interest expense to foreign-source income, thereby reducing foreign-source taxable income and limiting the foreign tax credit.

After months of partisan bickering and Senate inaction, Congress finally passed another round of COVID-19 relief legislation as part of the Consolidated Appropriations Act, 2021, P.L. 116-260, (“CAA”), which was signed into law on December 27, 2020. We provide a summary of the tax-related CAA provisions and key modifications to the Paycheck Protection Program (“PPP”), before discussing President Biden’s tax agenda for 2021. The CAA’s tax provisions focus primarily on providing economic relief to taxpayers by expanding provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and renewing extenders.

To refer to our initial analysis of the CARES Act, see our prior client alert, available here.