Washington Dispatch. Obama Administration s FY 2016 Budget proposes major overhaul of US international tax system. Also in this issue...

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1 February 2015, Volume 19, Issue 2 Washington Dispatch Obama Administration s FY 2016 Budget proposes major overhaul of US international tax system Also in this issue... IRS news 3 IRS finalizes regulations under Section 909 foreign tax credit splitting events 4 IRS Chief Counsel memorandum addresses application of tax rate disparity test for foreign sales branches 5 IRS concludes US shareholder must increase E&P in year of Section 951(a)(1) inclusion 6 IRS grants consent to change its asset method for apportioning interest expense under Section 861 regulations 6 IRS releases competent authority agreement with Kazakhstan on treaty benefits for fiscally transparent entities OECD news 6 OECD addresses BEPS Action 5 (nexus approach for IP), Action 13 (TP Doc and CbC reporting), and Action 15 (multilateral instrument) 7 OECD holds public consultation on BEPS Action 4 on interest deductions and other financial payments President Obama on 2 February 2015 released a nearly $4 trillion FY 2016 Budget that included a full plan for reforming and modernizing the international business tax system, the centerpiece of which is a 19% minimum tax on foreign earnings of USbased multinational corporations. (The 2012 President s Framework for Business Tax Reform called for a minimum tax on foreign earnings but did not specify a rate.) The proposal also called for a mandatory one-time 14% transition tax on the accumulated untaxed foreign earnings of US-based multinational companies, which is projected to raise $268 billion in revenue that would be used for infrastructure and funding the Highway Trust Fund for six years. At the same time, the Treasury Department released its General Explanations of the Administration s Fiscal Year 2016 Revenue Proposals (the Green Book) and revenue estimates. The President continued to call for tax reform that lowers the statutory corporate tax rate to 28% and achieves a top effective tax rate of 25% for domestic manufacturing. Like the previous two Budgets, the FY 2016 submission includes a reserve fund for business tax reform an effort that the Administration said would be revenue-neutral over the long run that combines revenue-raising provisions with incentives that would reduce tax revenue. The Budget, however, does not include a specific corporate rate reduction proposal. The Budget s release came as both the President and congressional Republicans sought common ground for a possible agreement on business tax reform. Although an international tax reform section in the Budget provides additional details, the Budget does not represent a fully detailed tax reform plan. The reserve for business tax reform in the Budget would raise a net total of $141.5 billion, an amount that could not achieve a significant reduction in the statutory corporate tax rate.

2 19% Minimum Tax on Foreign Income The Administration proposed to supplement the existing Subpart F regime with a per-country minimum tax on the foreign earnings of US corporations and their controlled foreign corporations (CFCs). The minimum tax would apply to a US corporation that either (i) is a US shareholder of a CFC, or (ii) has foreign earnings from a branch or from the performance of services abroad. The foreign earnings of the CFC or branch or from such services would be subject to current US taxation at a rate (not below zero) of 19% less 85% of the per-country foreign effective tax rate (the residual minimum tax rate). The country to which foreign earnings and associated foreign taxes are assigned would be based on tax residence under foreign law. Earnings and taxes of a particular CFC may be allocated to multiple countries if the CFC has earnings subject to tax in different countries. If the same earnings of a CFC are subject to tax in multiple countries, the earnings (and all of the foreign taxes associated with those earnings) would be assigned to the highesttax country. In assigning earnings to countries, both for purposes of determining the foreign tax rate as well as for determining the tentative minimum tax base for a particular year, rules would be implemented to restrict the use of hybrid arrangements to shift earnings from a low to a high-tax country for US tax purposes without triggering tax in the high-tax country. One-Time 14% Tax on Previously Untaxed Foreign Income Under the proposed minimum tax regime, no US tax would be imposed on dividend payments from a CFC to a US shareholder. As a transition measure, the Administration is proposing a one-time 14% tax on accumulated earnings of CFCs that were not previously subject to US tax. A credit would be allowed for the amount of foreign taxes associated with such accumulated earnings multiplied by the ratio of the one-time tax rate to the maximum US corporate tax rate for The one-time tax would be payable ratably over five years. The accumulated income would not be subject to further US tax on repatriation. Other FY 2016 international tax proposals In addition to the 19% minimum tax on foreign income and the one-time 14% tax on previously untaxed foreign income, the revenue proposals in the Administration s FY 2016 Budget include six new international tax proposals that would: Repeal delay in the implementation of worldwide interest allocation; Permanently extend the exception under Subpart F for active financing income; Permanently extend the lookthrough treatment of payments between related CFCs; Amend the CFC attribution rules of Section 958(b); Eliminate the 30-day rule under Section 951(a) with respect to Subpart F inclusions; and Treat purchases of hook stock by a subsidiary as giving rise to deemed distributions. The FY 2016 Budget includes three international tax proposals that reflect revisions to the proposals included in the Administration s budget for fiscal year 2015 (the FY 2015 Budget): Restrict deductions for excessive interest of members of financial reporting groups; Limit the ability of domestic entities to expatriate; and Prevent use of leveraged distributions from related foreign corporations to avoid dividend treatment. The remaining international tax proposals included in the FY 2016 Budget are substantially similar to proposals included in the FY 2015 Budget: Provide incentives for locating jobs and business activity in the United States and deny tax deductions for activity considered to involve shipping jobs overseas; Limit shifting of income through intangible property transfers; Disallow deduction for excess nontaxed reinsurance premiums paid to affiliates; Modify the treatment of dual capacity taxpayers; 2 Washington Dispatch February 2015

3 Tax gain from the sale of a partnership interest on a lookthrough basis; Remove foreign taxes from a Section 902 corporation s foreign tax pool when earnings are eliminated; Extend Section 338(h)(16) to certain asset acquisitions; Restrict the use of hybrid arrangements that create stateless income; Limit the application of exceptions under Subpart F for certain transactions that use reverse hybrids to create stateless income; Create a new category of Subpart F income for transactions involving digital goods or services; Expand foreign base company sales income to include manufacturing services arrangements; Exempt foreign pension funds from application of the Foreign Investment in Real Property Act (FIRPTA) provisions; Provide for reciprocal reporting of information in connection with implementation of the Foreign Account Tax Compliance Act (FATCA) provisions; Prevent the elimination of earnings and profits (E&P) through distributions of certain stock with basis attributable to dividend equivalent redemptions; and Repeal gain limitation for dividends received in reorganization exchanges. The following three proposals from the FY 2015 Budget (and earlier budgets) have not been included in the FY 2016 Budget: Defer deduction of interest expense related to deferred income of foreign subsidiaries; Determine the foreign tax credit on a pooling basis; and Tax currently excess returns associated with transfers of intangibles offshore. Republican reaction to the international tax provisions was not overtly negative. The House Ways and Means Committee held a hearing on the Administration s proposed FY 2016 Budget on 3 February. Ways and Means Committee Chairman Paul Ryan (R-WI) said that the inclusion of new details on international tax reform in the President s Budget was constructive, and both he and Treasury Secretary Jack Lew expressed an interest in working together on tax reform. Although Chairman Ryan said he probably takes issue with the rate and the style of hybrid [territorial tax system], he agreed with the concept of a permanent conversion to a permanent new [international tax] system. Later in the month, Chairman Ryan was quoted as saying if there is to be progress on US tax reform in the 114th Congress, it will have to take place before the August 2015 recess. The Chairman further said that if necessary, tax reform can be completed in incremental phases addressing business and individual reform, respectively, with the second phase beginning in 2017 when the next President takes office. Chairman Ryan underscored this was his personal assessment and not a hard deadline. IRS news IRS finalizes regulations under Section 909 foreign tax credit splitting events The IRS on 9 February 2015 issued final regulations (T.D. 9710) under Sections 909 and 704 that adopt, with modifications and clarifications, the temporary and proposed regulations issued on 14 February 2012 (REG ; T.D. 9577) (the 2012 regulations). The final regulations were issued on the same day that the temporary 2012 regulations expired. The final regulations, which apply to tax years ending after 9 February 2015, retain the approach of an exclusive list of splitter arrangements from the 2012 regulations and do not identify any additional splitter arrangements. The final regulations do, however: (i) clarify the determination of related income with respect to reverse hybrid splitter arrangements in the event that the reverse hybrid incurs a loss; (ii) modify the definition of usable shared loss, for purposes of loss-sharing splitter arrangements, to include a shared loss of a US combined income group that could have been used to offset foreign Washington Dispatch February

4 taxable income of the group in a previous tax year; and (iii) clarify that a transaction described under Section 381 does not result in the unsuspension of split taxes if the transaction does not cause the payor of the split taxes to take into account earnings and profits of the covered person equal to the amount of related income specified in the relevant splitter arrangement. The government indicated that additional mechanical rules for tracking related income and split taxes are under consideration and will be addressed in future guidance. The retention of the exclusive list of splitter arrangements in the final regulations, which parallel the 2012 regulations, should eliminate many uncertainties regarding the statute s scope, given the potential breadth of Section 909. While it is good news that no transactions have been added to the exclusive list at this time, taxpayers should note that Treasury and the IRS continue to consider other arrangements that inappropriately separate foreign income taxes from the related income, including arrangements between unrelated persons. Although the prospective nature of any future guidance is not expressed in the preamble, we would expect that any future guidance extending the existing splitter arrangements to include other transactions should apply prospectively only, consistent with the view expressed in the preamble to the 2012 Regulations. Taxpayers should consider whether to apply the provisions of Reg. Section T (splitter arrangements), in lieu of Reg. Section , to foreign income taxes paid or accrued in the first tax year ending after 9 February 2015, in light of the changes to the definitions of certain splitter arrangements. IRS Chief Counsel memorandum addresses application of tax rate disparity test for foreign sales branches In a generic legal advice memorandum (GLAM) dated 9 February 2015 (AM ), the IRS Chief Counsel s office addressed the most appropriate method for determining whether there is a tax rate disparity under the test in Reg. Section (b)(1)(i)(b) for property manufactured by a controlled foreign corporation (CFC). The GLAM concludes that the tax rate disparity test, as applied to a sales branch, should be determined by calculating the actual effective rate of tax and the hypothetical effective rate of tax, and by dividing both the actual tax and the hypothetical tax by the hypothetical tax base determined under the laws of the CFC s jurisdiction (i.e., the laws of the manufacturing jurisdiction). There has been limited written guidance under Section 954(d) regarding the method of applying the branch rule in general and the tax rate disparity test in particular, since the release of the final regulations under Section 954(d). The main purpose of the GLAM seems to be to address the application of the tax rate disparity test with respect to jurisdictions that allow for the exclusion of certain items from the tax base, such as territorial tax systems. In effect, any income exclusions in the sales branch jurisdiction which are not also available in the CFC s jurisdiction (the manufacturing jurisdiction), drive the sales branch ERT (actual effective rate of tax) lower and increase the chance of a rate disparity. Additionally, the GLAM addresses when sales-branch ERT increases because the sales income of the branch is subject to tax not only in the sales-branch jurisdiction but also in the CFC s jurisdiction. This situation can arise, for example, when the CFC s jurisdiction imposes tax on the sales income of the branch (often a corporation for non-us tax purposes) based on its own CFC rules or based on its residency rules (i.e., the sales branch is deemed to be managed and controlled in the CFC s jurisdiction). The potentially broader implications of the GLAM relate to the computation of the hypothetical tax base and the introduction of a new calculation based on the branch s gross income derived in connection with the sale of property sold on behalf of the CFC (TRD Gross Income). While not apparent as a result of the relatively simple facts of the GLAM, certain sales branches may need to consider whether their deductible 4 Washington Dispatch February 2015

5 payments most notably in the form of royalties or interest should be taken into account, and in what amount, for purposes of computing ERT. For instance, Brazil generally limits royalty payments to 1%. In computing the hypothetical tax base, must a royalty deducted by the sales branch be limited to the 1% amount allowed by Brazil if Brazil is the manufacturing location? Additionally, the GLAM states that, in computing the hypothetical tax base, expenses that are allocable and apportionable to the TRD Gross Income must be calculated, but does not provide a mechanism for that allocation and apportionment. The expansive language of the GLAM could be read to indicate that every aspect of a sales branch s taxable income (deductions, credits, exclusions, etc.) must be analyzed, not just under the sales-branch jurisdiction, but also under at least one other foreign jurisdiction, that of the CFC or manufacturing location. In effect, taxpayers could be required to ask what would happen to the taxable income of Country A if the laws of Country B applied. Although the GLAM notes that minor differences can be ignored in appropriate cases, there is little indication of what constitutes minor or appropriate. Absent additional guidance, this language could lead to disputes over simple timing differences and, for annual ERT fluctuations, result in material changes to foreign base company sales income each year. While prior IRS rulings indicated that non-us principles should control the ERT analysis, the existing guidance does not suggest that two (or more) foreign jurisdictions need to be analyzed. This approach appears to depart from past practice and go beyond long-standing regulatory language, which seems more narrowly focused on income-exclusion scenarios. Moreover, the ability of taxpayers to comply with, and of the IRS to administer, an approach involving complex computations that must rely on advice in multiple foreign jurisdictions is dubious. IRS concludes US shareholder must increase E&P in year of Section 951(a)(1) inclusion In Generic Legal Advice Memorandum (GLAM), issued 13 February 2015, the IRS concluded that a US shareholder must increase its earnings and profits (E&P) by the amount of its income inclusion with respect to a foreign subsidiary under Section 951(a)(1) in the year of the inclusion, regardless of whether the US parent receives distributions from the foreign subsidiary in the same year. The fact pattern at issue in the GLAM involved a domestic corporation (USP) that was the US shareholder of a foreign subsidiary (FS) treated as a controlled foreign corporation (CFC). FS earned Subpart F income and held United States property. As a result, USP had income inclusions under Section 951(a)(1)(A) and (B) respectively (Section 951 inclusions). In that same year, FS made no actual distributions to USP. The GLAM concludes that, in the absence of any statutory or regulatory rules on Section 951 inclusions that would deviate from the general rules regarding E&P under Section 312, Subpart F inclusions are subject to the general rule for when items are taken into account for purposes of E&P under Reg. Section As such, the IRS determined that USP must increase its E&P by the amount of the Section 951 inclusion in the year of the inclusion, regardless of whether USP receives distributions from FS in that year. The GLAM provides guidance to taxpayers on determining E&P when there is a Section 951 inclusion, concluding that increasing a US shareholder s E&P in the year of the Section 951 inclusion is consistent with the guidance on E&P. Moreover, certain arguments against this result, including the argument that E&P cannot be in two places at once, are discussed but summarily dismissed in the GLAM. Taxpayers should consider whether their treatment of E&P in relation to Section 951 inclusions is consistent with the conclusions reached in the GLAM, as the amount of a corporation s E&P will be important for such purposes as determining whether a distribution by that corporation is considered to be a dividend or should be characterized as a return of basis or capital gain. Washington Dispatch February

6 IRS grants consent to change its asset method for apportioning interest expense under Section 861 regulations On 30 January 2015, the IRS issued PLR consenting to a taxpayer s request to change from the fair market value method to the tax book value method of asset valuation for purposes of apportioning interest expense under Section 861 for subsidiaries of an acquired corporation that previously used the fair market value method. The PLR signals the Service s continued consent to granting taxpayers the right to change their asset method for purposes of interest expense allocation and apportionment as a result of an acquisition, where one party uses the fair market value method and the other does not. The Service may consent to a change from the fair market value method in other circumstance but, based on experience, taxpayers will need to provide some justification for such a request. It should be noted that while Temp. Reg. Section T(c)(2) requires taxpayers using the fair market value method to obtain consent from the Commissioner to change to either the tax book value method or the alternative tax book value method; in contrast, Reg. Section (i)(1) permits taxpayers using the alternative tax book value method to change to the fair market value method without consent at any time, or to the tax book value method without consent, unless the request is for a taxable year prior to the sixth taxable year for which the alternative tax book value method has been used. Where consent of the Commissioner is necessary, such consent must be received before the tax return is due for the year of the change, and is typically granted three to four months after the submission of the request. IRS releases competent authority agreement with Kazakhstan on treaty benefits for fiscally transparent entities On 2 February 2015, the IRS released Announcement , containing the text of a competent authority agreement on the application of the US-Kazakhstan tax treaty to fiscally transparent entities. The agreement generally provides that, if an entity that is treated as fiscally transparent under the laws of either Contracting State receives income from one Contracting State, the income will be treated as derived by a resident of the other Contracting State only to the extent that the income is subject to tax as the income of a resident of the other Contracting State. As a result, a fiscally transparent entity is generally only eligible to receive benefits under the US-Kazakhstan Treaty to the extent the owners of that entity or the entity itself are taxed as residents in the applicable Contracting State. In addition, the agreement details certain procedural rules under which fiscally transparent entities may confirm the United States residence of their owners and claim benefits under the Kazakhstan Treaty. The agreement provides a welcome clarification regarding the treatment of fiscally transparent entities for purposes of the Kazakhstan Treaty. It is consistent with other competent authority agreements entered by the United States, the United States regulations governing fiscally transparent entities, and provisions in recent United States treaties and protocols. These competent authority agreements, regulations, treaties and protocols each look to the owners of a fiscally transparent entity to determine whether a United States income tax treaty applies to the income earned by such an entity. Moreover, while the examples in the applicable regulations do not consider a case in which a Kazakhstan company is treated as fiscally transparent for United States tax purposes, such an entity would presumably be covered by the Agreement and could claim benefits under the Kazakhstan Treaty. OECD update OECD addresses BEPS Action 5 (nexus approach for IP), Action 13 (TP Doc and CbC reporting), and Action 15 (multilateral instrument) On 6 February 2015, the OECD released a trio of papers that address three of the focus areas in its Action Plan on Base Erosion and Profit Shifting (BEPS): Action 5: Agreement on Modified Nexus 6 Washington Dispatch February 2015

7 Approach for IP Regimes, Action 13: Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting, and Action15: A Mandate for the Development of a Multilateral Instrument on Tax Treaty Measures to Tackle BEPS. The OECD presented these developments during the G20 Finance Ministers meeting on 9-10 February Action 5: Agreement on Modified Nexus Approach for IP Regimes (Action 5 Paper), describes the consensus on the approach for a substantial activity requirement for intangible property (IP) regimes such as patent boxes in connection with BEPS Action 5 (harmful tax practices). The agreed approach builds on the modified nexus approach developed jointly by the German and UK governments. The Action 5 Paper describes conceptual issues with respect to the modified nexus approach and additional work that will be done in order to allow agreement on the detailed rules to be reached in Action 13: Guidance on the Implementation of Transfer Pricing Documentation and Countryby-Country Reporting provides much-anticipated guidance on implementation of the country-bycountry report (CbC Report) that is part of the three-tier transfer pricing documentation approach developed under BEPS Action 13. The guidance provides for the first CbC Reports to be filed covering 2016 fiscal years. The guidance further provides for CbC Reports generally to be filed in the home country of a multinational corporation group s parent company and shared with other relevant countries under government information exchange mechanisms. The guidance also addresses other implementation matters related to the CbC Report. In addition, the guidance includes some high-level information regarding implementation of the master file and local file elements of the transfer pricing documentation. Action 15: A Mandate for the Development of a Multilateral Instrument on Tax Treaty Measures to Tackle BEPS includes the mandate, agreed to by the OECD and G20 countries, with respect to the process for developing the multilateral instrument contemplated under Action 15. The mandate authorizes the establishment of an ad hoc group (Group) to conduct work on a multilateral instrument that would implement solely the BEPS measures that take the form of recommended tax treaty provisions. The Group is to have its first meeting no later than July 2015 with the aim to have the multilateral instrument ready for signature by year-end OECD holds public consultation on BEPS Action 4 on interest deductions and other financial payments The OECD held a public consultation in connection with the Base Erosion and Profit Shifting (BEPS) project on 17 February 2015 that focused on the Action 4 deductibility of interest deductions and other financial payments. The OECD is proposing broad limitations on interest deductibility. The consultation was an opportunity for stakeholders OECD hosts webcast update on BEPS project On 12 February 2015, the OECD hosted a webcast on its ongoing project to address base erosion and profit shifting (BEPS). A replay and the slides for the webcast can be found on the OECD website. The webcast included an overview of the OECD s recent activities with respect to its July 2013 Action Plan on Base Erosion and Profit Shifting and a brief report on BEPS related matters addressed in the G20 Finance Ministers and Central Bank Governors meeting held on 9-10 February 2015 in Istanbul. The webcast particularly focused on the work on transfer pricing issues related to risk, recharacterization and special measures (Actions 8-10), guidelines on value added tax (VAT) with respect to business to customer (B2C) transactions involving services and intangibles, and improving the effectiveness of treaty dispute resolution mechanisms. Washington Dispatch February

8 to engage directly with the OECD Secretariat and the country delegates who are responsible for the work on this Action. The UK delegate who is the co-chair of the focus group on Action 4 indicated that interest deductibility is a major concern for the countries involved in the BEPS project. Those concerns focus on situations where the total interest expense of group members exceeds the group s thirdparty interest expense as well as situations in which interest expense of a group does not align with the economic activity in the group. For this reason, the focus group is looking at options that would move the gearing of entities in the group closer to the gearing of the overall group. The co-chair noted the suggestion that best practice in this area should be based on the arm s length principle. The co-chair expressed the view, however, that few countries apply arm s length rules to interest and those that do use such rules do not use them to address BEPS activity. Therefore the focus group decided not to use the arm s length principle in the proposed measures under Action 4. Finally, the co-chair commented that the solution with respect to interest deductions and other financial payments will require interaction across countries. Business participants expressed a variety of concerns about the proposed group-wide approaches. It was noted that borrowing needs differ across entities within a group. The difficulties in using consolidated financial statement data to determine allocations to group members were discussed, including the fact that group-level adjustments would mean that the sum of the member numbers typically would not equal the group numbers such that the resulting allocation would not be based on 100% of the group s external interest expense. Comments were made about the drawbacks of both earnings and asset measures as the allocation key, and some participants suggested that flexibility regarding the choice of measure would be needed because of industry differences. Many participants stressed the inability to engage in self-help under a group approach because of the restrictions on pushing debt down to group members that exist in many countries, noting that the result therefore would be external interest expense that is deductible nowhere in the world. In response to an OECD question about whether these problems could be addressed by applying a group-wide approach to a number that exceeds 100% of a group s net external interest expense (say %), business participants indicated that such an adjustment would be arbitrary and that the results still would not be fair in particular cases because the structural problems with the groupwide approach would remain. Some business participants favored a fixed ratio approach as involving less complexity and providing flexibility for each country to set its own benchmark level. However, it was stressed that the benchmark ratio would have to be high enough to allow appropriate amounts of interest expense. In this regard, it was noted that different industries have very different amounts of leverage. It also was noted that interest above the amount allowed under a fixed ratio approach would be non-deductible while the interest income would be taxable, unless the OECD develops a linking rule that addresses the income inclusion. The discussion at the consultation underscored the significant impact that the limitations on interest deductibility contemplated in the Discussion Draft would have on financing activities and capital structures of multinationals. Moreover, such changes are being proposed against the backdrop of country activity in recent years that has involved enactment of a variety of new restrictions on interest deductions. 8 Washington Dispatch February 2015

9 Ernst & Young LLP, International Tax Services, Washington, DC Jose Murillo Barbara Angus Stephen Bates David Canale Doug Chestnut Ken Christman Tom Coony Arlene Fitzpatrick David Golden Liz Hale Lilo Hester Stephen Jackson Karen Kirwan Kyle Klein Richard Larkins Natan Leyva Richard McAlonan John Morris Alan Munro Peg O Connor Chris Ocasal Al Paul Karen Petrosino Craig Sharon Matthew Stevens John Turro Tim Wichman Matthew Berger Norman Hannawa Yuelin Lee Petya Kirilova Tammy LeGrys Katherine Loda Carlos Mallo Maria Martinez Ben Orenstein Preya Patel Dave Peppelman Loren Ponds Hubert Raglan Allen Stenger fax number International Tax Services Global ITS, Alex Postma, London ITS Director, Americas, Jeffrey Michalak, Detroit National Director of ITS Technical Services, Jose Murillo, Washington Member Firm Contacts, Ernst & Young LLP (US) Northeast Johnny Lindroos, McLean, VA Financial Services Phil Green, New York Central Mark Muktar, Detroit Southeast Scott Shell, Charlotte, NC Southwest Amy Ritchie, Austin West Frederick Round, San Jose, CA Canada - Ernst & Young LLP (Canada) Albert Anelli, Montreal Israel - Kost Forer Gabbay & Kasierer (Israel) Sharon Shulman, Tel Aviv Mexico - Mancera, S.C. (Mexico) Koen Van t Hek, Mexico City Central America - Ernst & Young, S.A. Rafael Sayagues, San José South America - Ernst & Young Serviços Tributários S.S. Gil F. Mendes, São Paulo Washington Dispatch February

10 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. International Tax Services About EY s International Tax Services practices. Our dedicated international tax professionals assist our clients with their cross-border tax structuring, planning, reporting and risk management. We work with you to build proactive and truly integrated global tax strategies that address the tax risks of today s businesses and achieve sustainable growth. It s how EY makes a difference. The Washington Dispatch is a monthly communication prepared by Ernst & Young LLP s Washington International Tax Services summarizing recent developments and inside-the-beltway news pertinent to multinational companies. For additional information, please contact your local international Tax professional. ITS Washington, DC 2015 EYGM Limited. All Rights Reserved. EYG No. CM5260 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com