Cross-border Tax Talks

The Global Tax Journey: 2025 to 2026

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Pat Brown, an International Tax Partner in PwC’s Washington National Tax Services practice and Co-leader of the National Tax Office. Pat previously served as GE’s VP of Tax and Director of Tax Policy. Doug and Pat discuss highlights from 2025: the US day-one Pillar Two executive order and the OECD’s late-year side-by-side package; Section 899; the shifting of DSTs into the trade lane; and the expanding role of the UN for global tax policy. On US policy, they also unpack how OBBBA yielded greater stability; CAMT corrections; stock buyback excise tax guidance; and long-awaited Section 987 rules. Looking ahead to 2026, they assess the potential for additional US tax legislation under reconciliation, as well as the future of Pillar Two, its complexity, and how QDMTTs are now the backbone of Pillar Two. 

• [00:00] Pat Brown introduction;  Virginia – Missouri bowl game. 
• [03:30] ChatGPT’s take on the most important 2025 international tax developments  
• [04:40] January 2025 OECD admin guidance: DTAs, GIR/XML, MCAA; US day-one executive order; immediate policy signal and pause; skeletal Treasury. 
• [07:05] Cape Town Inclusive Framework meeting: first articulation of US stance.  
• [08:20] Guidance slowdown in 2025; transitional safe harbor anxiety; ‘simplified’ ETR. 
• [09:20] Countries accelerate anyway: 58 enacted by year-end; filing inconsistencies; head-of-tax reality: management expectations, provision estimates.  
• [11:50] We have certainty: 2024–2025 Pillar Two compliance applies to US MNCs.  
• [12:30] Section 899; Congressional ‘sleeping giant’ awakens; inbounds focused on BEAT 
• [15:30] OBBBA timeline; G7 agreement underlies last minute Section 899 removal; Section 899 ‘not dead yet’.  
• [17:50] DSTs relatively quiet, except for Canada, New Zealand, India, Pakistan, Italy.  
• [19:19] Strategy shift regarding DSTs, handle via trade strategy (e.g., Section 301). 
• [20:50] Imminent SCOTUS IEEPA decision; President’s focus on tariffs; inflation/market effects; corporate nimbleness; lessons from the pandemic. 
• [24:05] UN’s growing role: developing country voice; credits and incentives.  
• [26:55] OBBBA reflections: stability as the headline benefit, although no permanency.  
• [30:00] The rake in the yard: interactions of CAMT/BEAT/Sections 250, 174A, 904; modeling imperatives. 
• [32:50] 2025 guidance: CAMT guidance prioiritized; addressing unintended consequences  
• [34:30] Disregarded Payment Loss rules: post-Loper Bright posture; regs still proposed.  
• [36:40] Stock buyback excise tax; elimination of the funding rule helps inbounds.  
• [37:00] Section 987 regs arrived; potential simplification this year? OBBBA guidance: 2025-effective items first; 2026 provisions next; more OBBBA guidance coming 
• [39:10] 2026 Congress: midterm elections; affordability focus; reconciliation skepticism.  
• [43:50] Pillar Two ‘side-by-side' inflection point; squaring UTPR with bilateral treaties and EU law.  
• [46:40] ‘Simplified’ ETR safe harbor not simple: complexity; capping deferred taxes; non-refundable credits: limited relief; implications for developing economies.  
• [48:20] Pillar Two practical bottom line: 2024–2026 compliance, 50+ QDMTTs not vanishing; QDMTT becomes Pillar Two backbone; more adoptions to protect domestic base.  
• [49:40] Longevity of UTPR given treaty issues and IIR; watch EU law.  
• [50:00] Close: expect 2026 to be very active time in both the US and globally.  

View full podcast series