Cross-border Tax Talks

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Pat Brown, an international tax partner and Co-Leader of PwC’s Washington National Tax Services practice and former US Treasury’s Associate International Tax Counsel. In part three of Doug’s three-part OBBBA discussion with Pat, they discuss the newly enacted OB3 reconciliation law, focusing on its permanent corporate and individual tax provisions, the recalibration of bonus depreciation, Section 174 expensing and Section 163(j); the Senate’s redesign of GILTI, FDII and BEAT; Inflation Reduction Act rollbacks; Treasury’s last-minute removal of Section 899; and the G7’s surprise accord intended to exempt US-parented groups from Pillar Two’s IIR and UTPR while elevating QDMTTs and compliance simplification. They map the procedural and legislative steps still needed, potential timing gaps, and why multinational groups must keep Pillar Two compliance front-of-mind.  

In this engaging discussion, Jesse Kavanaugh, an international tax partner at PwC Hong Kong and expert in Pillar Two regulations, shares his valuable insights. He highlights the uneven implementation of Pillar Two across various Asia-Pacific jurisdictions and addresses the pending legislation in Hong Kong. Jesse explores the complexities of compliance management, particularly the pitfalls in transitional safe harbors and the unique challenges faced by industries like shipping and real estate. His crucial advice? Start preparing for compliance now!

In this enlightening discussion, Pat Brown, an International Tax Partner and Co-Leader at PwC’s Washington National Tax Services, shares his expertise on the intricate details of the 'One Big Beautiful Bill.' He and Doug McHoney delve into the complexities surrounding the legislative maze, including the urgent July 4th deadline and the challenges of aligning House and Senate bills. They discuss crucial changes to GILTI, FDII, and the BEAT, revealing how these modifications will impact both domestic and international taxpayers.

Pat Brown, an International Tax Partner at PwC and former Deputy International Tax Counsel, joins Doug McHoney to discuss the 'One Big Beautiful Bill.' They dive into its legislative path in Congress and its implications for both domestic and international taxpayers. Key topics include temporary business provisions, the impact of Section 899 on digital services taxes, and the evolving treatment of research expenses. They also tackle the complexities of U.S. tax credits under global minimum tax rules and international negotiations surrounding the Undertaxed Profits Rule.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Jenny Chong, Shanghai-based International Tax Partner and PwC’s Asia-Pacific International Tax Services Leader. Doug and Jenny discuss the structure and enforcement of China’s international tax regime, including corporate tax rates, incentives, CFC rules, and foreign tax credits. They examine the complexities of indirect stock transfer rules, audit trends, and beneficial ownership requirements. The conversation turns to Pillar Two, where Jenny outlines how Chinese multinationals are preparing despite a lack of formal adoption. They also explore the implications of potential termination of the US-China tax treaty and the resurgence of tariffs. Jenny shares how Chinese companies are adapting to compliance burdens and regulatory uncertainty amidst global tax and trade tensions. 

Doug McHoney chats with Leo Johnson, a lecturer at Oxford and co-founder of Sustainable Finance, known for his insights on megatrends. They delve into the psychological hurdles tax professionals face during crises, like climate change and economic stress. Leo introduces behavioral personas such as catalysts and silent rebels and discusses strategies to overcome resistance to change. Together, they emphasize the importance of purpose, autonomy, and collaboration in fostering high-performing teams while addressing burnout and cultivating meaningful work.

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.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Arne Schnitger, a Berlin-based International Tax Partner at PwC Germany and co-host of the German-language tax podcast “Frisch Serviert.” Arne previously served in the German Ministry of Finance and brings deep insight into both domestic and cross-border policy developments. Doug and Arne discuss Germany’s evolving corporate tax landscape, including potential rate reductions, simplification initiatives, and the implications of recent coalition negotiations. They dive into Germany’s controlled foreign corporation (CFC) regime, explore the mechanics of the constitutional ‘German debt brake,’ and unpack recent developments surrounding Pillar Two. The conversation highlights the intersection of German and US tax policy, the ongoing tension between multilateralism and unilateral measures, and the administrative and technical challenges multinationals face under the global minimum tax framework. They also examine prospects for EU-level simplification and the future of long-standing anti-avoidance measures in light of Pillar Two implementation. 

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.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Dr. Romero Tavares, PwC Brazil’s International Tax Leader and a professor of international tax law in São Paulo. Doug and Romero discuss the increasing intersection between Brazil’s international tax policy and global trade dynamics, including the effects of recent US executive orders. They cover Brazil’s high-tax corporate environment, its historically aggressive CFC-like full inclusion regime, and the country’s rapid adoption of a qualified domestic minimum top-up tax (QDMTT). The conversation explores the political and policy rationale behind these moves, the anticipated redesign of Brazil’s CFC regime, and the operational challenges multinationals face with the new OECD-aligned transfer pricing rules. Romero also breaks down Brazil’s massive indirect tax reform and the country’s potential shift to more internationally-aligned tax norms, while questioning the long-term viability of the undertaxed profits rule (UTPR) and Pillar Two’s durability under changing geopolitical winds.