Pillar 2 Commentary: A knowledge GAAP?
Doug McHoney (PwC's US International Tax Services Co-Leader) is joined by PwC’s Calum Dewar, Leader of PwC’s Integrated Global Structuring practice. They discuss the Pillar Two Model Rules & Commentary and its potential impacts on the global tax system, transfer pricing adjustments, deals and more.
- 1:50 - How big of a change is Pillar Two going to be to the Global tax system?
- 4:00 - The rules appear to be designed for IFRS companies rather than US GAAP companies. What does that mean for multinational companies?
- 8:15 - Did the commentary clarify how the undertax payment rule (UTPR) establishes the need for a connection or transaction?
- 12:15 - What does Pillar Two mean for tax treaties?
- 16:30 - Were there any changes to the provisions on booking down tax attributes to the minimum tax rate (Article 4)? Many were surprised that there seems to be a possibility of a top-up tax in a year with no income.
- 18:30 - The commentary provides an example of a tax credit equivalent to a portion of a tax paid under the income inclusion rule (IIR) to be used against other taxes as being a condition that would prevent a regime from being regarded as a qualified IIR. What did we learn about whether a tax regime is a qualified IIR?
- 22:15 - What does this mean for the US’s GILTI regime and subpart F?
- 27:00 - The commentary expands on the definition of the qualified refundable tax credit and clearly articulates the disparate treatment between qualified and non-qualified tax credits. What is that important and what are some examples in the US?
- 29:00 - The non-refundable tax credits can cause a jurisdiction that otherwise might have a high statutory rate, like the US, to have a GLOBE tax rate below 15%. What are some examples in the US?
- 31:45 - What does the commentary say about transfer pricing agreement adjustments (Article 2.3)?
- 34:30 - There were over 50 pages of examples released as part of the commentary.. Were there any highlights or lowlights that we should take from those examples?
- 38:30 - The rules are not enacted yet, but we’re in a period right now where certain transactions taxpayers enter into today could be impacted by the rules. What should taxpayers be mindful of today in the context of cross-border or even in-country asset deal? What about stock deals?
- 42:45 - Poland does not support Pillar Two unless directly tied to Pillar One. Does this mean that Pillar Two is dead in Europe?
- 47:00 - What are Calum’s views on timing?
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