Cross-border Tax Talks

Pillar Two: GloBE Return and CbyC Safe Harbours

Doug McHoney (PwC's US International Tax Services Global Leader) is joined by Mike Olecki, PwC’s International Tax Services Global Technology Leader and partner in the Quantitative Services Tax Practice. Doug and Mike discuss the OECD Pillar Two documents released in December 2022, including the transitional CbyCR safe harbour, the potential for a permanent safe harbour, the GloBE Information Return, calculation challenges, and how technology can help.

Timestamps:

• 1:55 - How did Mike get involved with international tax technology?
• 4:35 - Many tax professionals were trained on spreadsheets. What has been Mike’s experience in training staff and taxpayers to make calculations outside of a spreadsheet?
• 6:15 - In December of 2022, the OECD released a number of documents related to Pillar Two. Starting with the Safe Harbour and Penalty Relief guidance, many of us were optimistic this could significantly relieve taxpayers’ administrative and compliance costs. What are Mike’s initial thoughts on the overview of the Safe Harbours presented by the OECD?
• Components of the Temporary Safe Harbour:
  • 12:30 - de minimis test
  • 13:50 - simplified effective tax rate test
  • 15:20 - the routine profits test
  • 18:15 - Article 9.1 transition rules
  • 18:45 - qualifying financial statements
• 19:45 - Is this a Safe Harbour that will relieve taxpayers of their administrative and compliance costs?
• 20:45 – Turning to the GloBE Information Return, what are Mike’s overall thoughts and views of what is included in the document?
• 25:45 - What are some challenges that Mike sees with the data points required by the GloBE return?
• 27:20 - Where is this data located?
• 29:44 - Any examples of challenges with respect to covered taxes?
• 32:20 - How can technology help when it comes to different interpretations of the Pillar Two rules across jurisdictions?
• 39:45 - What advice does Mike have for taxpayers and advisors with regard to tax years beginning on or after December 2023.

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