US Guidance Update: Pillar Two and more
On this episode, Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Wade Sutton. Wade is PwC’s Washington National Tax Service’s ITS Leader, a former adjunct professor of international tax at Georgetown University's Law Center, and former Deputy International Tax Counsel, US Treasury. Doug and Wade discuss what drove them to international tax as a career (spoiler: job security) before diving into recent US tax guidance. They discuss the recent foreign tax credit (FTC), corporate alternative minimum tax (CAMT) and Previously taxed E&P (PTEP) notices. They also discuss the interaction of Pillar Two with the FTC rules, dual consolidated loss (DCL) rules, and CAMT. Doug and Wade wrap up by looking ahead to guidance we might see in 2024.
Timestamps:
- 1:20 – Why should someone make a career in international tax?
- 4:00 – Doug and Wade start the technical discussion with recent guidance on the Foreign Tax Credit Rules, Notice 2023-80, which really is three IRS notices in one.
- 7:26 - Wade and Doug discuss guidance on the application of foreign tax credits for Pillar Two and Treasury’s views on the issue with respect to the creditability of the Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), and the Qualified Domestic Minimum Top-up Tax (QDMTT)
- 12:47 – The Section 78 gross-up: How the rules work; the issue with circularity
- 15:44 – Treasury's views on the QDMTT rules in certain jurisdictions, both for ordering purposes and requirements for creditability
- 17:53 - The interaction of the dual consolidated losses (DCLs) and Pillar Two; what are the DCL rules?
- 22:29 – Challenges under the interaction of US rules and OECD rules
- 23:24 – Notice 2024-16 on Previously Taxed E&P (PTEP); what is PTEP, to which kinds of transactions does it apply (e.g., covered inbound transactions), and how might the guidance apply more narrowly
- 30:12 – Taxpayers should consider commenting while the period is still open
- 31:02 – Wade and Doug discuss the possible timing of proposed regulations
- 31:12 – Overview of the corporate alternative minimum tax (CAMT), including basic mechanics
- 32:57 – How does CAMT interact with Pillar Two?
- 34:10 – Overview of CAMT Notice 2023-64; how to deal with CAMT FTCs
- 38:05 – How are distributions of CFC earnings treated under Notice 2024-10?
- 40:34 - What exceptions under CFC distributions do taxpayers need to be aware of?
- 42:14 – What was not covered in the notice? What's been addressed in comment letters?
- 44:04 – Other guidance we should expect from Treasury in 2024, including CAMT, possible rules on cloud computing, and the sourcing of transactions, domestically controlled REITS, PFICs and the aggregate treatment of partnerships, and more FTC guidance.
View full podcast series
