Itai Grinberg: The Pillar Two origin story (part 2)
May 6, 2025
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Itai Grinberg, a Georgetown University law faculty member and former US Treasury Deputy Assistant Secretary, shares insights on the global corporate minimum tax initiative. He reveals the behind-the-scenes dynamics of Pillar Two, discussing the impact of the Biden administration's early support and the controversial Build Back Better legislation. Grinberg also addresses international tensions like Brexit and US-China relations, while reflecting on future cooperation challenges in multinational tax policy. His unique perspective highlights the intricate balance between global negotiations and domestic concerns.
Professor Itai Grinberg details his role in negotiating the global corporate minimum tax, emphasizing U.S. alignment with international tax cooperation.
The G7 agreement established a consensus on a 15% minimum tax rate, marking a significant step towards combating tax avoidance globally.
Geopolitical tensions and legislative changes present ongoing challenges for the implementation of the OECD's Pillar Two framework and international tax cooperation.
Deep dives
Introduction to PwC's Pillar 2 Engine
PwC's Pillar 2 engine is a significant innovation in international tax compliance, serving as a centralized rules engine that leverages a robust graph system built over two decades of expertise. This cloud-based service is designed to streamline modeling, provision, and compliance calculations related to the OECD's Pillar 2 framework. By utilizing advanced technology developed by a team of international tax experts, it aims to simplify the complexities faced by multinational enterprises navigating global tax challenges. The engine is packaged as a service available for licensing, representing a game-changing solution in the arena of international taxation.
The Dynamic Nature of International Tax
Professor Itai Grinberg emphasizes the intricacies of a career in international tax, highlighting it as a constantly evolving field that requires professionals to stay informed about diverse cross-border transactions. He contrasts this dynamic environment with more static areas of law, such as litigation, which may lack the same breadth of change and development. The challenge of tackling complex technical problems alongside larger geopolitical questions adds depth to the profession, making it a compelling choice for those who enjoy intricate puzzles. Grinberg’s personal experiences in international tax have given him a unique perspective, fostering a genuine appreciation for the work involved in this ever-changing landscape.
The Role and Impact of the U.S. Treasury
During his tenure at the U.S. Treasury, Grinberg was integral in formulating strategies for global corporate taxation, particularly through the OECD's Pillar Two framework. His role extended to briefing key government officials, including Secretary of the Treasury Janet Yellen, on important developments within international tax negotiations. The administration focused not only on tax policy but also on the broader goal of rebuilding economic relationships with allies following the Trump era. By emphasizing the need for a global minimum tax, Grinberg contributed to aligning U.S. corporate tax policy with international cooperation, thereby addressing both domestic and global economic challenges.
Pillar 2's Global Reception and Future
There was a marked shift in the discussion and acceptance of Pillar 2 following the G7 meetings, which established a consensus among member countries on a global minimum tax rate of 15%. The agreement signified an important step towards collective action on international tax issues, reflecting a renewed commitment to combat tax avoidance and enhance cooperation. However, the ongoing complexities of domestic legislative processes in the U.S. and competing international interests highlight potential hurdles for Pillar 2's successful implementation. As negotiations evolve, the U.S. must navigate its own political landscape while engaging with international partners to secure the stability and efficacy of the framework.
Challenges and Considerations Ahead
Looking forward, Grinberg expresses concern over the future of international tax cooperation amid rising geopolitical tensions and domestic political changes. He notes the significance of maintaining trust between the U.S. and its partners while tackling issues such as the Undertaxed Profits Rule (UTPR) and Digital Services Taxes (DSTs). The complexities introduced by new legislative proposals complicate the landscape further, as countries seek to enforce compliance without disregarding their domestic interests. The current uncertainty may lead multinational enterprises to reevaluate their strategies, emphasizing the need for clarity and stability in international tax policies to promote global economic growth.
Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Professor Itai Grinberg, a faculty member at Georgetown University Law Center and a former Deputy Assistant Secretary at the US Treasury Department during the Biden administration. In that role, Itai served as the United States' lead negotiator for the global corporate minimum tax initiative. Doug and Itai discuss the behind-the-scenes history of Pillar Two from the US perspective, exploring its policy rationale, global negotiations, and shifting political dynamics. The conversation begins with how Itai’s got his role at Treasury and builds a detailed timeline tracing the Biden administration’s early support for global minimum tax rules through the 2021 G7 agreement and the development of the Under-Taxed Profits Rule (UTPR). They also delve into the impact of the Build Back Better legislation which was not enacted, the rationale behind the US safe harbor under UTPR, international political tensions including Brexit and US-China relations, and the implications of the April 2025 Trump executive order. The episode closes with reflections on the OECD Inclusive Framework’s future and whether multinational enterprises can expect a workable consensus moving forward.
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