Stewart Brant, Managing Director at PwC’s Tax Policy Services, shares his expertise on international tax policy and the Pillar Two initiative. The conversation navigates the current global enactment of Pillar Two, revealing varied country applications and retroactive rules. They also discuss potential impacts of a Trump administration and the UN's evolving role in shaping these policies. The light-hearted baseball banter adds a unique touch to the serious discussions, making tax compliance a bit more engaging.
The Digital Tax Study Group fosters collaboration among multinational corporations by providing critical insights on the evolving global tax landscape.
The enactment of Pillar Two legislation shows significant regional variations, with notable advancements in Europe, South America, and Africa.
Deep dives
PwC's Pillar 2 Engine
PwC has developed a cloud-based centralized rules engine for Pillar 2 tax modeling, built upon over 20 years of international tax technology expertise. This innovative engine is designed to facilitate compliance calculations and improve efficiency for multinational corporations. As a service, it is currently available for licensing, allowing businesses to streamline their Pillar 2 processes. The presence of a dedicated team of Pillar 2 tax experts globally enhances its effectiveness and relevance in addressing complex international tax obligations.
Digital Tax Study Group Overview
The Digital Tax Study Group (DTSG) was established to track developments related to Pillar 1 and Pillar 2 and provide insights for various members, including multinational corporations. Originally formed eight years ago, the DTSG has witnessed a growing membership that spans not only tech companies but also other sectors impacted by the shift in tax regulations. Joining the DTSG offers companies regular updates and observations on global tax policy changes, particularly regarding taxation of the digital economy. This group aims to keep members informed and engaged as the regulatory landscape evolves.
Pillar 2 Developments Across Europe
In Europe, significant progress has been made with the implementation of the Minimum Tax Directive, requiring 27 member states to enact necessary laws by the end of 2023. Most countries have successfully transposed these rules, with only a few lagging behind, leading the EU Commission to initiate infringement proceedings. Specific countries like Slovakia have opted for a Qualified Domestic Minimum Top-up Tax effective in 2024, while others are still determining their legislation status. The situation remains fluid as countries navigate complex issues related to retroactive legislation and administrative guidance.
Global Pillar 2 Status and Future Outlook
The status of Pillar 2 legislation varies significantly across global regions, with notable advances in South America, the Asia Pacific, and Africa. For instance, Brazil has introduced a proposed QDMTT, while Colombia has earlier initiated tax reforms and is exploring alternative minimum taxes. Similarly, African nations like Zimbabwe and South Africa are drafting their QDMTTs amidst a landscape of broader challenges related to tax competitiveness and the informal economy. As the global dialogue continues, the impact of U.S. political changes on Pillar 2 enactment is anticipated, with companies needing to prepare for compliance with the evolving regulatory frameworks.
Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Stewart Brant, Managing Director in PwC’s Tax Policy Services to discuss the latest Pillar Two developments. Doug and Stewart start off – after baseball of course – discussing the purpose of the Digital Tax Study Group. Then they cover the status of Pillar Two enactment in Europe, Asia, the Americas, the Pacific, the Caribbean, Middle East, and Africa. They also cover how different countries are applying the rules retroactively, the impact a Trump administration could have on Pillar Two, as well as what role the UN could play.
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