Cross-border Tax Talks

One Big Beautiful Podcast, Part 4: Inbound Edition

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Nita Asher, an international tax principal in PwC’s Washington National Tax Services practice focused on inbound multinationals, with prior government experience during the TCJA. Doug and Nita discuss the One Big Beautiful Bill Act (“OB3”) and its impact on inbounds, including permanent 100% bonus depreciation; new Section 168N for qualified production property; Section 163(j)’s EBITDA-based ATI; the reworked ‘FDDEI’ (formerly FDII) and its 14% rate with outbound IP limits; shifting IRA credit timelines and ‘foreign entity of concern’ issues; BEAT’s modest rate bump to 10.5% and unchanged credit treatment; the potential future of Section 899; and CAMT interactions. Throughout, they emphasize modeling to avoid BEAT/CAMT whipsaws while capturing OBBBA cash-flow benefits.

• [00:00] Intro and setup; show opens from PwC’s Policy on Demand studio in D.C.  
• [00:01:50] Summer anecdotes; the ‘one big, beautiful bill’ arrives mid-vacation.  
• [00:04:00] OB3 overview: July 4, 2025, enactment; permanence theme; Section 899 omitted (at least for now).  
• [00:05:00] Bonus depreciation: permanent 100%; first-year transition election; modeling cautions.  
• [00:08:10] New Section 168N: 100% bonus for qualified production property; ‘substantial transformation’; service-by-2031 clock.  
• [00:11:45] Section 163(j): EBITDA reinstated permanently; elective capitalization and CFC/subpart F/Section 78 interactions; staggered effective dates.  
• [00:16:30] ‘FDDEI’ replaces FDII: 14% rate; outbound transfer no longer qualifies; R&E allocation implications; June 2025 trigger.  
• [00:20:30] IRA credits: accelerated phase-outs, placed-in-service timing, and prohibited/foreign entity of concern considerations.  
• [00:23:50] BEAT refresher: definition, unchanged credit offsets, rate to 10.5% (not 12.5% under TCJA).  
• [00:26:20] The BEAT high-tax exception idea surfaced, but vanished, in negotiations.  
• [00:28:20] BEAT thresholds unchanged: $500M receipts and 3% base-erosion percentage.  
• [00:29:30] Interactions: bonus depreciation and Section 174 can lower regular tax but raise BEAT risk.  
• [00:32:20] Section 899 post-mortem; G7 side-deal and the chance of a rerun.  
• [00:36:30] CAMT: 15% book-income minimum; thresholds; carryforward dynamics; coordination with BEAT.  
• [00:40:07] Wrap-up: ‘modeling, modeling, modeling’ - capture cash-flow wins while managing minimum taxes.  

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