Cross-border Tax Talks

Pillar Two in Asia-Pac: Still happening 

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Jesse Kavanaugh, an international tax partner at PwC Hong Kong who leads Tax Reporting & Strategy and co-heads PwC’s Asia-Pacific Pillar Two team. Formerly the global head of tax operations for a US tech multinational, Jesse brings both in-house and advisory insights. Doug and Jesse discuss the uneven rollout of Pillar Two across nine Asia-Pac jurisdictions; China, India and US uncertainties; Hong Kong’s Pillar Two legislation (pending when this podcast was recorded, but enacted on June 6, 2025) and HKMTT design; why many countries are shelving the UTPR; looming QDMTT deadlines; the critical difference between data-gathering and calculation engines; pitfalls that blow up transitional safe harbors, including management accounts, hybrid loans, interest-free debt and purchase-price accounting; and industry-specific challenges for shipping, airlines and real estate. Jesse closes with a simple message: start compliance prep now…registration and early QDMTT filings wait for no one. 

Timestamps:

• 00:00 Opening – Doug launches episode 185 from PwC’s APAC Symposium. 
• 00:55 – Introduction - Jesse’s current roles and background in Australia, Hong Kong and Silicon Valley. 
• 02:20 - Cultural Shock – Adapting to US corporate culture. 
• 04:35 - Pillar Two Turns Center Stage – Status update: nine Asia-Pac adopters and varied effective dates. 
• 06:15 - China, India, Hong Kong Outlook – Geopolitics, pending bills and HKMTT features. 
• 10:05 - UTPR Pause Button – Why Singapore waits and Japan proceeds; US Section 899 noise. 
• 12:00 - Compliance Timelines – Early QDMTT filings accelerate group-wide readiness. 
• 15:55 - Data vs. Calculation Strategy – Three approaches: ERP, bolt-on tool or spreadsheets. 
• 20:00 -Data Pain Points – Entity granularity, sub-consolidations and immaterial ledgers. 
• 25:55 - Safe-Harbor Failures – Management accounts and hybrid arbitrage derail expectations. 
• 30:30 - Interest-Free Debt & Arm’s-Length Rules – Liquidity tools that trigger zero-tax income. 
• 32:55 - Industry Deep Dive – Shipping exemptions, airline asset mobility, real-estate valuation. 
• 36:40 - Final Recommendations – Start now; use PwC’s tracker; registrations are critical. 

View full podcast series