Cross-border Tax Talks

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Taxing FX of Branches: the new Section 987 regulations Dec 19, 2023

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Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Rebecca Lee (WNTS ITS Partner) in PwC’s Washington, DC studio for the 140th (and Rebecca’s) episode of the Cross-Border Tax Talks podcast. Rebecca, a frequent guest on the podcast, specializes in financial transactions and digital assets. Doug and Rebecca discuss the history and intent of Section 987, which is generally to address the taxation of foreign exchange gains/losses from a foreign branch operating in a different functional currency than its home office. The rules started out relatively simply at three sentences, but since enactment we’ve received 100s of pages of regulations. Doug and Rebecca discuss how the layers of complication led to confusion and concerns over policy and administrability. This background is critical to understanding the challenges companies are facing today with the November 2023 proposed regulations. Doug and Rebecca dissect and analyze the 250-page package, what new elements and limitations they introduce, and what this means for affected companies, including industries like banking and insurance. They close the discussion with how the effective dates work and why the operation of these rules may have surprising results.

UK Pillar Two: Painting while the paint dries Dec 12, 2023

Show notes

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Matt Ryan at PwC’s Global Tax Symposium in Rome. Matt is a London-based international tax partner and PwC UK’s Pillar Two Leader. Doug and Matt revisit the UK Pillar Two rules for the third time, but now from an enacted law perspective. While the rules are set to apply from the beginning of 2024, the United Kingdom faces an interesting challenge as one of the early adopters of Pillar Two, with enacted legislation, followed by additional OECD guidance. Doug and Matt discuss the tricky task for UK legislators of ‘painting while the paint still dries’ (i.e., enacting legislation while the OECD guidance is still changing) and some of the key differences that need to be addressed as a result of the subsequent OECD guidance, as well as still-expected guidance in 2023 and beyond. Doug and Matt discuss from a practical perspective how UK-parented taxpayers are preparing for what is ahead, including approaches to safe harbors. They then dive into complexities created by the particularities of the UK rules around the safe harbor and other key issues, like partnerships and deferred taxes. Finally, the podcast closes with practical next steps companies operating in the UK should consider ahead of 2024.

Pillar Two: Policy, politics and interaction with Pillar One Dec 07, 2023

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Doug McHoney (PwC’s International Tax Services Global Leader) is at PwC’s Global Tax Symposium in Rome, where he’s joined by Will Morris. Will is PwC’s Global Tax Policy Leader, and on Will’s last visit to the podcast, he covered FSR, the Foreign Subsidies Regulation. On this podcast, an exciting and familiar topic - Pillar Two! Doug and Will discuss generally how the Pillar Two process has been going. They wonder how tax authorities and courts will administer and adjudicate in their jurisdictions, and what will become of the potential FAQs and future administrative guidance from the OECD. They then discuss the recent EC guidance, and whether countries will be able to bring in the OECD guidance retroactively. Finally, Doug and Will touch on how business have participated thus far in the process.

Pillar One: Policy, politics and interaction with Pillar Two Nov 30, 2023

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Doug McHoney (PwC’s International Tax Services Global Leader) is at PwC’s Global Transfer Pricing Conference where he’s joined by Giorgia Maffini. Giorgia is part of PwC’s Global Transfer Pricing team in London and was previously the Deputy Head of the Tax Policy and Statistics Division at the OECD. Doug and Giorgia discuss why taxpayers should care about Pillar One, starting with the basics - what is Pillar One and how does it work with Pillar Two? They discuss the complexities, scope and impacts of both Amount A and Amount B. Also the timing, economic impact, and what’s next. Finally, they address what might happen with digital services taxes and what companies should do next.

Pillar Two Safe Harbors: The CbCR journey Nov 15, 2023

Show notes

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by David Ernick, a Principal with PwC’s Washington National Tax Services Transfer Pricing Practice and former Associate International Tax Counsel at the US Treasury Department, at PwC’s Global Transfer Pricing Conference in San Diego, California. They discuss Country-by-country reporting (CbCR) transitional safe harbor rules, including the safe harbor tests, exclusions to the rules, the difference between the safe harbor rules and the full GLoBE rules, as well as whether a CbCR is ‘qualifying’. Doug and David also discuss the history and implementation of public CBCR.

On notice: US developments and Moore hype Oct 30, 2023

Show notes

Doug McHoney (PwC’s International Tax Services Global Leader) is at PwC’s Tax Leadership Conference in breezy Orlando with Pat Brown, frequent pod guest and co-leader of PwC’s Washington National Tax Services. They discuss US tax updates, including the status and fate of the Tax Cuts and Jobs Act (TCJA); the future of Section 163(j); notices and guidance from Treasury, including the recent Section 174 notice 2023-63; FTC relief notice, and what to anticipate in the coming months and years with respect to foreign tax creditability; what’s included and what’s not included under the corporate alternative minimum tax (CAMT); Section 367(b) ‘Killer B’ regulations; and the Moore case.

Trick or treat(y): An update on US treaties Oct 04, 2023

Show notes

Doug McHoney (PwC’s International Tax Services Global Leader) is back in Westminster Studios in St. Louis, Missouri with Nils Cousin, a Washington, D.C. based International Tax Services Principal specializing in US inbound taxation. Together they discuss tax treaties, mutual agreement procedures, the concept of competent authority, the treaty process in the US, recent US tax treaty activities, treaty shopping, the USMCA Trade Agreement, and the future of tax treaties in the United States. Among the treaties and agreements discussed are US treaties and agreements with Chile, Croatia, Hungary, Taiwan, and Russia.

Moore v. US: Constitutionality of international tax Sep 20, 2023

Show notes

Doug McHoney (PwC's International Tax Services Global Leader) and Wade Sutton (former Deputy International Tax Counsel for the US Treasury and newly appointed ITS leader of PwC’s Washington National Tax Practice) are back in Washington, D.C. to discuss the recent Supreme Court grant of certiorari for the Moore v. US case. Doug and Wade go back to their law school days to break down the Moore case, starting with the facts, procedural history, and the potential implications if Section 965 is ruled unconstitutional, including direct taxation, indirect taxation, subpart F, Section 245A, GILTI, and, as always, Pillar Two.

Poutine Routine: Canada’s Pillar Two, DSTs, with G(AA)Ravy on top Sep 07, 2023

Show notes

Doug McHoney (PwC's International Tax Services Global Leader) and Ken Buttenham meet up in PwC’s Washington, D.C.. studio. Ken leads PwC Canada’s International Tax Practice from Toronto. Doug and Ken kick off with a discussion on Doug’s favorite Canadian food, then dive into the Canadian Pillar Two proposals, discussing the Global Minimum Tax Act (GMTA), UTPR, IIR, QDMTT, compliance, the GloBE Information Return, and tax incentives. They also cover digital services taxes (DSTs), the excessive interest and financing expenses limitation (EIFEL) rules, and the Canadian General Anti-Avoidance Rule (GAAR).

Pillar Two in Hong Kong SAR: Not yet a sticky wicket? Aug 22, 2023

Show notes

Doug McHoney (PwC's International Tax Services Global Leader) and Jesse Kavanaugh (PwC Hong Kong SAR’s Tax Reporting & Strategy Leader) met up at PwC’s AsiaPac Global Tax Symposium in Singapore. Jesse is an International Tax Partner in Hong Kong SAR and has been leading the region’s Pillar Two tax efforts. They discuss the state of play of Pillar Two in Hong Kong SAR, trends regarding safe harbours and data collection, modeling and calculations challenges, the centralized and decentralized approaches to Pillar Two inherent to the region, and the Hong Kong SAR legislative process. They also touch on the addition of Hong Kong SAR to the EU’s ‘grey list’ and the recent introduction of the Foreign Source Income Exemption (FSIE) Regime for Passive Income.

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