G20 endorsed a global minimum corporate tax deal

  • At the G20 meetings, held July 9 – 10, 2021, the finance ministers from G20 countries endorsed the statement on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. Further, the G20 “call[ed] on the OECD/G20 Inclusive Framework on BEPS to swiftly address the remaining issues and finalise the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by our next meeting in October.” On July 11, at a press conference following the close of the G20 meetings, US Treasury Secretary Janet Yellen said “the details of Pillar One remain to be negotiated,” but that she is hopeful “it will be ready in the Spring of 2022.” “Pillar Two, we’re hoping to have incorporated in the coming budget resolution and reconciliation bill the changes that are necessary to put it into effect,” she added.

US Senator Crapo and Representative Brady remain skeptical of OECD global tax agreement

  • On July 8, US Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Finance Committee, and US Representative Kevin Brady (R-Texas), House Ways and Means Committee ranking member, reiterated their concerns with respect to the OECD agreement in a letter addressed to US Treasury Secretary Yellen. Senator Crapo and Representative Brady warned that “Congressional support for an agreement at the OECD will hinge on protecting American workers and the US tax base.” Senator Crapo and Representative Brady outlined three key areas where the Administration must take a strong position in favor of American interests: (1) the global minimum tax must be fair to American workers and companies, (2) the global profit allocation must not disproportionately affect Americans, and (3) the unilateral discriminatory digital taxes must be repealed immediately. In response to the OECD agreement, Representative Brady on a conference call stated, “I think this is frankly years from being done. And I am confident that Congress will reject any tax agreement that advantages foreign companies and workers over US companies, or surrenders a key part of America's tax base that we'll need, frankly, to pay for our government services going forward.”

France pledged to remove its unilateral digital services tax once OECD deal is implemented

  • In response to the US lawmakers’ concerns on unilateral digital taxes, France Finance Minister Bruno Le Maire pledged to “get rid of the French national taxation on digital services” as soon as the OECD agreement is implemented. “I’m ready to take not only a political but also a legal commitment in the French finance bill for 2022,” he said. “I will want to avoid any kind of concern for the US people.”

OECD confident remaining jurisdictions will endorse global tax agreement

  • The OECD published a list confirming 132 member jurisdictions out of the 139 jurisdictions participating in the global negotiations have agreed to the OECD Inclusive Framework on BEPS as of July 9, 2021. The OECD said it is confident countries that the remaining jurisdictions that have not yet signed will eventually do so. The remaining jurisdictions that have yet to endorse the agreement include EU members: Estonia, Hungary and Ireland. France Finance Minister Le Maire said that he is trying to persuade his peers to get on board and that it would be “very much disappointing” if some EU member states ultimately oppose the agreement.

US urged Canada to abandon its unilateral DST

  • On July 6, US Trade Representative Katherine Tai hosted a bilateral meeting with Canada’s Minister of Small Business, Export Promotion and International Trade Mary Ng. In the meeting, Representative Tai urged Canada to abandon its proposed unilateral DST in light of the OECD agreement on a global taxation reached last week, according to a readout from the meeting.

EU postpones release of digital levy proposal

  • It was reported that the EU Commission postponed the release of their digital levy proposal by a week to July 20. EU Commission Executive Vice President Valdis Dombrovskis confirmed that the EU was working with international partners to ensure that the digital levy would not interfere with the OECD process.

US lawmakers intend to include corporate minimum tax in 2022 budget bill

  • The Senate is expected to begin moving a fiscal 2022 budget resolution this month for a filibuster-proof reconciliation bill with the proposed 15% corporate minimum tax. US Senator Joe Manchin (D-W. Virginia) recently endorsed the proposed 15% corporate minimum tax aimed at the worldwide profits by companies with more than $2 billion in income. Several senior Democrats are optimistic, as Senator Manchin’s support is crucial to ensure corporate tax changes in a reconciliation bill can pass the Senate. House Ways and Means Chairman Richard Neal (D-Massachusetts) said that the 15% corporate minimum tax was one of the items that could be included in the tax package for a reconciliation bill this fall.

Subscription to data considered taxable rental of tangible personal property in Arizona

  • The Arizona Department of Revenue recently released Private Taxpayer Ruling LR 21-003 (dated May 27, 2021), finding that gross income arising from the provision of temporary use of digital information and data is subject to the transaction privilege tax (TPT). The taxpayer is an information and analytics company that provides primarily publically available information and data from multiple sources that is continually updated, sorted, and filtered for each customer. Customers pay a subscription fee to remotely access the data that is housed on the taxpayer’s servers located outside Arizona. Customers only receive the right to use the data, and do not receive access to software. The TPT is imposed on tangible personal property, which is any property that “may be seen, weighed, measured, felt or touched or is in any other manner perceptible to the senses.” Arizona has broadly interpreted that definition of tangible personal property to include electricity, electronic delivery of software, and even music played from a jukebox. Based on this broad understanding of tangible personal property and the application of the “dominant purpose” and “common understanding” tests, the Department concluded that the rental of data is a taxable sale of tangible personal property, regardless of how the data is delivered.

Kentucky enacts sales tax exemptions for cryptocurrency mining facilities

  • Effective July 1, 2021, Kentucky has enacted sales tax and utility gross receipts exemptions for certain transactions involving the commercial mining of cryptocurrency. The Kentucky DOR explained the two recently enacted bills here. HB 230 exempts the sale or purchase of electricity used or consumed in the commercial mining of cryptocurrency from sales tax and utility gross receipts tax. "Commercial mining of cryptocurrency" is defined as the process through which blockchain technology is used to mine cryptocurrency at a colocation facility. The facility must consume at least 200,000 kilowatt hours of electricity per month. SB 255 updated Kentucky’s existing incentive program for energy-related businesses to extend to cryptocurrency facilities making investments over $1 million. Qualifying cryptocurrency facilities are eligible for several incentives, including the new sales tax exemption on all purchases of tangible personal property to construct, retrofit, or upgrade an eligible project, including commercial cryptocurrency mining equipment at a qualifying facility.