Cross-border Tax Talks

February 20, 2025

Pillar Two: Administrative Guidance Part 5

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Steve Kohart, an International Tax Principal in PwC’s New York City office and former advisor to the OECD’s Center for Tax Policy and Administration. Doug and Steve discuss the OECD’s latest administrative guidance on Pillar Two, covering key changes to transition rules, deferred tax asset adjustments, tax credits, and compliance burdens for multinational corporations. They dive into the OECD’s focus on Bermuda and Switzerland, new anti-abuse measures, implications of the Qualified Domestic Minimum Top-up Tax (QDMTT), and the complexities of the new Globe Information Return (GIR). The conversation also explores the political and procedural challenges in implementing additional guidance, particularly in light of the new US administration’s stance on Pillar Two.

Timestamps:

1:10 – Steve Kohart’s background and experience with the OECD
3:00 – The fifth round of OECD administrative guidance: What’s the significance of Article 9.1 and what did the guidance say?
5:35 – What was the OECD’s concern that led to this round of guidance?
7:40 – What does the administrative guidance tell us about the deferred tax assets (DTAs) about which the OECD was concerned?
9:10 – Can you explain the grace period rule?
12:10 – What did the OECD say about DTAs from tax losses that are more than five years old?
13:25 – What is a future related benefit and how did the OECD address it?
16:15– Anti-abuse measures: What new rules might be coming?
17:50 – What is the OECD’s administrative process: How is new guidance made?
19:40 – Will we see additional administrative guidance?
20:35 – What is qualifying status and why is it important? What if a country is not on the qualified list?
24:50 – Is it a G-I-R or a GRRR? What guidance did the OECD provide on the GIR?
28:10 – What did the OECD say about using the Model Rules versus local legislation?
30:15 – Compliance burdens: How great is the need for technology-driven tax solutions?
31:15– What is the OECD’s Model Competent Authority Agreement (MCAA) and why is it important?
34:00 – What are some open questions and unresolved issues for which companies are seeking guidance?