Pillar Two Admin Guidance: Glimpses of clarity
Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Phil Ramstetter, International Tax Partner and former Tax Policy Consultant at Business at OECD (BIAC). Doug and Phil discuss the OECD’s Administrative Guidance released in June 2024, including the deferred tax liability (DTL) recapture rule or five-year rule, the allocation of cross-border taxes, deferred tax accounting, transactions within the GloBE rules, entity classification and treatment, and the expectation of more OECD administrative guidance in the second half of 2024.
Timestamps:
- 2:35 – What is the background and context of the OECD’s fourth round of administrative guidance on the Model Rules?
- 5:50 – What is the background of the ‘five-year rule,’ also known as the “DTL recapture rule”?
- 10:10 – What is the ordering of the application of these DTLs? FIFO or LIFO?
- 13:15 – Moving on to divergences from GloBE and accounting carrying values – what does this guidance broadly cover and does it provide any helpful clarity?
- 17:00 – What about the guidance on transactions within the GloBE rules?
- 21:55 – What do the new rules on allocation of cross-border current taxes say?
- 25:05 – Did we get helpful guidance on deferred tax accounting for GILTI?
- 27:20 – Does this guidance provide helpful insights into entity classification and treatment for Pillar Two purposes?
- 33:40 – Are we going to continue to get this kind of mechanical guidance, or will it slow down?
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