US Guidance Update: Pillar Two and more
Cross-border Tax Talks
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Avoiding Double Counting in International Taxation
The biggest international tax issue with KMT was the potential double counting of income in the tax base in AFSI. This issue arose from two separate rules applied to a single CFC's earnings: the pass-through flow-through rule that taxes a US shareholder on its pro-rata share of the net income of the CFC, and the rule that requires including dividends from non-consolidated group corporations in AFSI. The concern was that the same earnings could be taxed first at the CFC level and then again when distributed, leading to double counting.
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