Cross-border Tax Talks

Pillar Two: UK realities  

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Matt Ryan, PwC UK’s International Tax and Treasury Network Leader and the UK’s Pillar Two lead. Recording in Barcelona at PwC’s Global Tax Symposium, they take stock of Pillar Two implementation and the much‑watched ‘side‑by‑side’ agreement. Doug and Matt discuss policymakers’ evolving openness to net CFC tested income (NCTI) coexistence, the UK’s 2027 legislative path with potential effect from 2026, the UTPR safe harbor expiration, practical frictions around POPE reporting, M&A data gaps, and the lack of a global dispute mechanism. They also examine transitional versus permanent safe harbors, potential consequences if Section 899 re‑emerges—including expanded BEAT exposure—and quick UK updates on the 25% corporate rate and the digital services tax.  

• 00:30 - Introduction: MLB in the UK 
• 03:40 - Setting the stage: what’s at stake with a Pillar Two side‑by‑side agreement.  
• 04:20 - UK outlook: inclusive framework timing, competitiveness concerns, and year‑end expectations.  
• 05:20 - Global tone shift: broader acceptance that NCTI can coexist with Pillar Two.  
• 06:35 - Why enactment matters: guidance vs. law for financial reporting and timing.  
• 07:45 - UK path: legislate in 2027 with possible effect from January 1, 2026.  
• 09:35 - UTPR safe harbor for US‑parented groups ends for calendar‑year filers after December 31, 2025.  
• 10:10 - Scope debates: IIR/UTPR reach into foreign subs 
• 11:10 - EU 1962 jurisprudence: can guidance bypass local law? 
• 12:15 - Sticky issues: JVs/POPEs  
• 13:50 -M&A diligence: transitional data, asset values, and purchase‑price adjustments.  
• 15:15 - Disputes: no global mechanism 
• 17:05 - Safe harbors: transitional window, talk of extension, and permanent design questions.  
• 18:00 - Safe‑harbor math: Rate, DTA recast, and recapture complexity.  
• 20:30 - Section 899: UK reaction, dependence on side‑by‑side progress 
• 23:00 – BEAT: exposure shock  
• 23:55 - UK tax updates   
• Corporate rate at 25% 
•  UK DST remains ‘temporary’ pending Pillar One 
• Simplification? CFC/hybrid rules persist given Pillar Two thresholds.  
• 29:00 -Wrap‑up: Watch 2027 enactment/2026 effect, side‑by‑side content, and accounting impacts.  

View full podcast series