Tax Update (October 19)
|Treasury Releases 2019 Regulatory Plan:
This week, the Treasury Department released their regulatory plan for 2019. The plan identifies 17 regulatory projects regarding implementation of the 2017 Tax Cuts and Jobs Act as a “first priority.”[i] It states that “the IRS and Treasury’s Office of Tax Policy will continue to . . . eliminate, or in other cases reduce, the burdens imposed on taxpayers by eight regulations that the Treasury has identified for review under Executive Order 13789.”[ii] Can read more here.
Opportunity Zones Regulations:
Today, the Treasury Department released the regulations for Opportunity Zones legislation passed as part of the TCJA. The legislation provides citizens and companies with a tax break on capital gains that flows into special “Opportunity Funds.” The funds then use that money to make investments in business ventures in lower-income communities designated as “Opportunity Zones.” The regulations are designed to provide the funds with enough flexibility to immediately start making investments. The regulations are attached.
Senator Tim Scott (R-SC) released a press release on the regulations. Click here to read the full release.
House Ways and Means Chairman Kevin Brady (R-TX) also released a statement on the regulations. Click here for the full release.
EU Digital Tax + Minimum Corporate Tax:
In what is described as a “BEPS 2.0”, German finance minister Olaf Scholz, in league with France, is proposing to the OECD a minimum corporate tax that would – or could – be in lieu of the tax on digital goods being considered by many EU countries. The US is reportedly willing to consider the idea, especially if it could head off further spread of the digital tax contagion which targets only US tech giants Google, Facebook, and others. While Scholz is pitching the tax as an alternative, French finance minister Bruno Le Maire has said he sees a corporate minimum tax as an add-on to the digital tax.[iii]
At the same time, Spain’s new minority Socialist government is considering a tax on digital services aimed at companies with more than $860M in revenues, which like other similar European proposals, would hit only US-based technology companies.[iv]
On Thursday. Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) sent a letter to the European Commission. The letter stated that the European Commission should abandon the proposed digital services tax, which would create significant trade issues between the United States and Europe.