Cross-border Tax Talks

Withholding retaliation? US Sections 891 and 899

Apr 8, 2025

Tom Patten, a London-based US International Tax Partner at PwC, dives into the complex and often overlooked Sections 891 and 899 of the U.S. tax code. He discusses the upcoming executive order that aims to address discriminatory foreign taxes and its potential repercussions for non-US citizens. The conversation shifts to proposed changes to the BEAT rules, focusing on how these retaliatory measures could affect multinational corporations. With insights into navigating this evolving landscape, Patten provides essential advice for companies facing uncertain tax regulations.

40:57

Episode guests

Tom Patten

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Section 891 introduces the possibility of doubling tax rates on foreign entities with discriminatory tax regimes against U.S. taxpayers, raising uncertainties around its implementation.

Proposed Section 899 seeks to build upon Section 891 by imposing incremental taxes on income from jurisdictions with discriminatory practices, reflecting evolving legislative responses to international tax challenges.

Deep dives

PwC's Pillar 2 Engine Revolutionizes Tax Compliance

A new cloud-based engine developed by PwC, known as the Pillar 2 engine, offers a significant advancement in compliance and calculation processes regarding international taxation. This engine leverages over 20 years of expertise in international tax technology, providing centralized calculations and modeling for Pillar 2 provisions. It is designed to aid firms in navigating the complexities of international tax compliance, delivering its services as a licensed solution. The solution combines the knowledge of global tax experts and sophisticated technology to enhance accuracy and efficiency for organizations dealing with cross-border tax issues.

Intro

2min

Navigating Sections 891 and 899 of the U.S. Tax Code

4min

Navigating U.S. Tax Provisions: Sections 891 and 899

20min

Navigating U.S. Tax Treaties and Legislative Changes

8min

Navigating U.S. Tax Proposals and Their Implications

2min

Navigating U.S. Tax Reform and Legislative Engagement

4min

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Tom Patten, a London-based US International Tax Partner at PwC. Tom focuses on inbound investment into the U.S. and returns to the podcast for a timely discussion on Sections 891 and 899, two lesser-known but increasingly important provisions in the international tax landscape. Doug and Tom discuss the resurgence of Section 891 in light of a January 2025 executive order that directs Treasury to identify discriminatory or extraterritorial foreign taxes. They cover how Section 891 operates, potential implications for non-US citizens, and its interaction with treaties. The episode then turns to proposed Section 899 and a new House proposal aimed at modifying the base erosion and anti-abuse tax (BEAT). Tom and Doug examine how these retaliatory measures differ, overlap, and might evolve. They close with practical advice for multinational taxpayers navigating an uncertain legislative environment and the future of Pillar Two negotiations.

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Cross-border Tax Talks

Withholding retaliation? US Sections 891 and 899

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

PwC's Pillar 2 Engine Revolutionizes Tax Compliance

Understanding Section 891: A New Tax Proclamation Tool

The Proposed Impact of Section 899

Future Tax Reforms and Retaliatory Measures

Remember Everything You Learn from Podcasts