Cross-border Tax Talks

April 27, 2023

Pillar Two: The UK’s latest installment

Doug McHoney (PwC's US International Tax Services Global Leader) hosts Matt Ryan, London-based International Tax Partner and leader of PwC’s UK Pillar Two Ready Team. Doug and Matt discuss the second draft of the UK’s Pillar Two legislation, the probable timing of enactment, the accounting implications, the UK’s Qualified Domestic Minimum Top-up-Tax, and some of the ‘deviations’ in the UK rules.

Timestamps:

  • 1:30 - The UK recently released its second draft of UK Pillar Two legislation. How does the UK legislative process work, and how and when will the Pillar Two rules become enacted law?
  • 5:30 - One of the challenges in developing a Pillar Two calculation is figuring out how different jurisdictions deviate from the OECD Model Rules. Will the UK deviate from the OECD guidance?
  • 8:30 - If the UK rules are enacted and subsequent guidance is later released, how would those changes be incorporated into UK law?
  • 12:00 - How could each jurisdiction’s enactment timeline lead to ‘natural deviations’ in the rules?
  • 14:30 - What is the timing of the Income Inclusion Rule, the Undertaxed Profits Rule and the Qualified Domestic Minimum Top-up Tax in the United Kingdom?
  • 15:30 - Are UK taxpayers falling below the 15% GloBE rate?
  • 18:10 - What about tax compliance and filing requirements?
  • 20:00 - Highlights of the UK ‘deviations’
    • 20:45 - How does the UK legislation affect partnerships?
    • 24:15 - What is the most recent legislation regarding the country-by-country safe harbour rules?
    • 27:55 - How might the UK audit the country-by-country reports?
    • 28:50 - How will prior-year adjustments work?
    • 30:25 - What is the UK’s approach to deferred taxes for covered branches?
    • 34:20 - Will QDMTTs be creditable against a surcharge in the UK?
  • 37:55 - Generally, where are UK taxpayers on their Pillar Two journey?
  • 40:35 - What advice does Matt have for taxpayers at the end of the first quarter?

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Speakers

Doug McHoney

International Tax Services Global Leader, PwC US

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Matt Ryan

Partner, Tax, PwC United Kingdom

+44 (0)7718 981211

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Doug McHoney

Doug McHoney

International Tax Services Global Leader, PwC US

Geoff Jacobi

Geoff Jacobi

ITS, Knowledge Management Managing Director, PwC US

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