Daily Tax Update - September 15, 2016: Treasury, IRS Issue Foreign Tax Credit Guidance Regarding Foreign-Initiated Adjustments

Treasury, IRS Issue Foreign Tax Credit Guidance Regarding Foreign-Initiated Adjustments:  Today, Treasury and the IRS released Notice 2016-52, which provides guidance relating to certain transactions that will be considered foreign tax credit splitter arrangements under section 909.  Section 909 is intended to prevent the separation of creditable foreign taxes from related income by, in general, deferring the right to claim credits until the related income is included in US taxable income.  According to the notice, Treasury and the IRS intend to issue regulations under section 909 that will identify two new splitter arrangements relating to section 902 corporations that pay foreign income taxes pursuant to foreign-initiated adjustments.  The regulations will apply similar rules to taxpayers that take the position that taxes paid by a US person pursuant to a foreign-initiated adjustment to the tax liability of a section 902 corporation are eligible for a direct foreign tax credit under section 901.  Treasury and the IRS have requested comments on the rules described in the notice.  

OECD Releases Comments Received on Discussion Draft Regarding Approaches to Address BEPS Involving Interest in the Banking and Insurance Sectors:  Today, the Organization for Economic Cooperation and Development (OECD) released the comments it received on its discussion draft regarding approaches to address base erosion and profit shifting (BEPS) involving interest in the banking and insurance sectors under Action 4 (Limiting Base Erosion Involving Interest Deductions and Other Financial Payments) of the BEPS Action Plan.  The OECD released the discussion draft on July 28.

European Commission Launches Effort to Create List of Non-Cooperative Tax Jurisdictions:  Today, the European Commission (Commission) announced that it has begun developing the first common European Union (EU) list of non-cooperative tax jurisdictions.  According to a press release, a “common EU list of non-cooperative jurisdictions will carry much more weight than the current patchwork of national lists when dealing with non-EU countries that refuse to comply with international tax good governance standards.  An EU list will also prevent aggressive tax planners from abusing mismatches between the different national systems.”  The Commission plans to publish the “definitive list” of non-cooperative tax jurisdictions by the end of 2017.