Four weeks to 1 September 2023
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Pillar Two
- No turning back now: UK Pillar Two legislation enacted
With Finance (No. 2) Bill 2023 substantively enacted for IFRS and UK GAAP purposes, marking a significant milestone in the country's adoption of the OECD Pillar Two regime, our PwC webpage article outlines the reporting requirements and challenges for groups to prepare for the upcoming implementation of Pillar Two rules, including disclosures and potential future changes. - Our Pillar Two Country Tracker
Our Pillar Two Country Tracker (last updated 4 August) provides the status of Pillar Two implementation in different countries and regions, including information about safe harbours.
Case law updates
- Unallowable purpose: taxpayer loses appeal at UT in JTI case
The Upper Tribunal (UT) handed down its decision in the JTI case on 7 August, see here. This case involved a third party acquisition, ultimately funded by the US parent borrowing external debt and using existing cash. The taxpayer lost on unallowable purpose at the First tier Tribunal and has now lost their appeal to the UT. - SSE: meaning of ‘group’ considered in M Group Holdings Ltd v HMRC
This appeal concerns the substantial shareholding exemption ("SSE"), in particular the meaning of ‘group’ for this purpose. The taxpayer argued that it satisfied the definition, even though there were no other members. In a decision published on 31 August, the UT held that a group requires at least two members. Read the decision here.
UK transfer pricing documentation: new law comes into force & guidance issued
The enactment in the UK of the Spring Finance Bill 2023 - which received royal assent in July to become Finance (No.2) Act 2023 (the Act) - brought to a formal conclusion a more than two-year process to update the UK’s transfer pricing documentation requirements. That process started in March 2021, with the release of a public consultation document in response to which various proposals were put forward. Some of those proposals have been included in the new legislation, and others have been put on hold or noted for further consultation in the near future. In essence, the new rules bring the UK transfer pricing documentation requirements into closer alignment with the OECD model for documentation, developed under Base Erosion Profit Shifting (BEPS) Action 13. Read more in this PwC Tax Insights.
HMRC Manual & guidance updates
The following changes have recently been made by HMRC following review:
- Capital Gains Manual
- CG52637: Share exchange: Share exchanges involving non-UK incorporated close companies. Updated 30 August - Page reinstated.
- CG52700: Company reconstructions: shareholder: introduction - Updated 30 August to add cross reference to guidance where securities are issued by a non-UK company on or after 17 November 2022.
- Non-resident companies - There have been multiple changes made to the sections relating to the taxation of non-resident companies, including exemptions, tax credit arrangements and de-grouping charges. See here.
- Corporate Finance Manual
- CFM99000: Interest restriction: administration: penalties: penalties for failure to deliver an interest restriction return - Updated 30 August
- Corporate Intangibles Research and Development Manual
- Patent Box - Numerous updates to the Patent Box sections were made on 25 August - see details here.
- Patent Box: overview of the patent box regime: contents - Updated 16 August to archive links to CIRD200160
- R&D tax reliefs: large company scheme: contents - Updated 9 August to archive links to CIRD85100
- Cryptoassets Manual
- CRYPTO10300: Introduction to cryptoassets: consensus - proof of work and proof of stake - guidance updated on 21 August
- International Manual
- INTM422000 - Transfer pricing: methodologies: Advance Pricing Agreements - new paragraph added and paragraphs updated 18 August
- The Non-resident Landlords Scheme - Updated 24 August - Links INTM370010 to INTM370090 archived.
Treaty updates
- Russia suspends double tax treaties
Russia has suspended substantially all material provisions of many of its double tax treaties by Presidential decree dated 8 August 2023. This action affects 38 countries’ double tax treaties, including the 1994 UK-Russia Double Taxation Convention, in respect of which the UK received notification from Russia on 15 August 2023. See this update from HMRC. - Double Taxation Treaty Passport Scheme register
HMRC has updated the register of overseas corporate lenders who are passport holders for Double Taxation Relief on UK loan interest. The register has been updated as at 24 August with 126 additions, 6 amendments and 101 removals.
Consultation on TP, PE and DPT - CIOT response
The UK government launched a consultation on possible changes to three of the most fundamental aspects of the UK’s taxation of multinational enterprises (MNEs) on 19 June 2023: transfer pricing (TP), permanent establishments (PE) and Diverted Profits Tax (DPT). Responding to this consultation, the CIOT said it supported the overarching recommendations, which would simplify tax rules and provide greater certainty to businesses. Read more.
UK REITs: An attractive vehicle for UK property investment
A real estate investment trust (REIT) is a property investment company which, very broadly, simulates (from a tax perspective) direct investment in UK property, and so avoids the double taxation that can arise when investing through a corporate structure. The appeal of the UK REIT continues to grow. Originally the exclusive preserve of the public markets, successive changes to the regime since its inception in 2007 have been designed to allow a broader category of investors to establish REITs, including private equity and institutional capital. Read more.
Join us at Reframing Tax live - 9am - 12pm, Thursday 28 September
Reframing tax live will explore the strategic value tax can deliver, to help businesses deal with the disruptive impacts of today’s rapid shifts in business models and markets. Be part of the latest conversations happening in tax transformation, gain exclusive insights from PwC experts and technology providers, and connect with peers to find inspiration to help reframe the role of tax. Create your bespoke agenda across four of the biggest issues organisations face every day: 1) Delivering sustainable growth; 2) Rethinking risk; 3) Embracing transformation; and 4) Creating and protecting value in deals. Your bespoke programme will be sent directly to your inbox. Register here.
EU
EU Commission proposes adding Cameroon and Vietnam to AML list
Cameroon and Vietnam should be added to the EU's list of high-risk third countries for anti-money-laundering (AML) purposes, the European Commission said in a recent proposed delegated regulation.
CFE Tax Advisers Europe
EU Tax Policy News Top 5
The latest round-up of EU Tax Policy news from the Confédération Fiscale Européenne (CFE). The latest edition from 7 August includes: 1) EU Parliament Subcommittee on Tax Matters’ Fact Finding Mission in Singapore; 2) CFE Professional Affairs Conference: “Tax Adviser 2030: Evolution or Revolution for Tax Practice, Policy and Administration?” 3) OECD Guidance on Mitigating Illicit Flows in Oil Commodity Trading; 4) CFE Opinion Statement in Case-83/21 Airbnb Ireland & Airbnb Payments UK; and 5) International Tax Conference – “Taxes of Tomorrow: Directions of Tax Law Development in European Countries” – 22 September, Katowice, Poland. Visit their latest news page here.
OECD
Pillars One and Two
- Responses to Pillar One Amount B consultation
The OECD’s public consultation on Amount B of Pillar One ran from 17 July to 1 September. See the CIOT response. PwC's response will be available shortly. - Pillar Two Administrative Guidance: More details, more questions
In this Cross-border tax talks episode from 14 August, Doug McHoney (PwC's International Tax Services Global Leader) is joined by Steve Kohart, International Tax Principal with PwC in New York City and former Advisor for the Center for Tax Policy and Administration for the OECD. Together they discuss the latest wave of OECD Pillar Two guidance including the Subject-to-Tax-Rule (STTR), UTPR safe harbour, qualified domestic minimum top-up tax (QDMTT) safe harbour, marketable transferable tax credits (MTTCs), as well as the six key pieces of the substance base income exclusion (SBIE). - Webcast: The current state of the OECD's two-pillar solution
While there is uncertainty around Pillar One (both on the timeline and on whether a critical mass is achievable), many countries have begun implementing Pillar Two. Watch our webcast from 27 July for the latest updates on the OECD's two-pillar solution here. - Updated Pillar Two Country Tracker
We’ve updated our Pillar Two Country Tracker to include information about safe harbours, the ability to expand all content, and added updated country profiles. We’re also working to develop export options, so we’ll keep you updated as the tool develops. You can also find updates on recent Pillar Two developments in the territory updates below, including:- Australian Taxation Office has commenced targeted public consultation with selected taxpayers
- Canada releases draft Global Minimum Tax Act to implement Pillar Two
- Pillar Two in Hong Kong: Not yet a sticky wicket?
- Luxembourg releases draft law to implement global minimum tax
MLI
On 1 August 2023, around 1,200 treaties concluded among the 82 jurisdictions which have ratified, accepted or approved the BEPS Convention have already been modified by the BEPS Convention. Around 650 additional treaties will be modified once the BEPS Convention will have been ratified by all Signatories.
- Tunisia ratifies MLI
On 24 July, Tunisia deposited its instrument of ratification for the Multilateral BEPS Convention (MLI), which now covers around 1850 bilateral tax treaties. The Convention will enter into force on 1 November 2023 for Tunisia. - Austria extends application of MLI
Austria deposited a notification extending the application of the BEPS Convention (MLI) on 30 August. - MLI effective for Vietnam
The BEPS multilateral instrument (MLI) became effective for Vietnam from 1 September 2023. Vietnam has listed 75 double tax agreements as "covered agreements" for the purposes of the MLI.
The text of the BEPS Convention, the explanatory statement, background information, database, and positions of each signatory and parties are available at https://oe.cd/mli.
Other territories
International
International Tax News, Edition 122 - August 2023
International Tax News is designed to help multinational organisations keep up with the constant flow of tax developments. Among the topics featured in this month's edition are: 1) Canada releases draft Global Minimum Tax Act to implement Pillar Two; 2) Updates on Hong Kong’s proposed refinements to the FSIE regime and tax certainty enhancement scheme for onshore equity disposal gains; 3) The UN Secretary-General releases early Report on promotion of inclusive and effective international tax cooperation; and 4) Israeli tax circular addresses MAPs for tax treaties.
The UN Secretary-General releases early report on promotion of inclusive and effective international tax cooperation
On 8 August 2023, the UN Secretary-General published an advance unedited version of a report (‘Report’) analysing options/next steps around UN tax cooperation. The Report follows the approval and adoption of the draft resolution from certain African countries in late 2022. The official version will be released before the next session of the UN General Assembly in September, during and after which discussions will occur on what parts of the Report to adopt. The options – which are not mutually exclusive – are: (1) a multilateral convention on tax, (2) a framework convention on international tax cooperation, and (3) a framework for international tax cooperation. Read more in our Tax Policy Alert.
Digital tax byte
The latest edition in our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business. This edition, from 30 August, includes: 1) the announcement about New Zealand DST legislation being prepared, in case it’s needed from 1 January 2025; 2) changes to the French DST Guidance mainly in relation to ancillary services and to the India GST rules; 3) new VAT guidance from Egypt, on digital services; 4) comment on an Indian case covering cloud services; and 5) we flag progress in the IASB discussions on accounting changes for Pillar Two and also highlight some updates to our Pillar Two country tracker.
Australia
SGEs: have your say on the implementation of Pillar Two GloBE Model Rules
The Australian Taxation Office has commenced targeted public consultation with selected taxpayers likely to be in scope of the proposed measures and their advisors with a focus on potential administration issues and has advised that all Significant Global Entities (SGEs) and their advisors should start to consider if they are in scope and prepare for the implementation of Pillar Two in Australia and other jurisdictions. The consultation is being undertaken in a phased approach: Phase 1 with industry groups and their members (July – August 2023); Phase 2 with mid-tier firms (August – October 2023); and Phase 3 with large advisory firms (September – November 2023). Read more in this news release.
Claiming the R&D tax incentive this tax time
If you engage in research and development (R&D) activities and are eligible for the R&D tax incentive, you must lodge an R&D tax incentive schedule when you lodge your company tax return. Read more in this news release.
Belgium
See here for latest updates.
Interest paid to qualifying foreign EEA AIFs may now benefit from the Belgian WHT exemption
A new Royal Decree amending the Royal Decree implementing the Belgian Income tax code (RD/BITC) was recently published. The Decree includes various amendments, but one of the main updates was the extension of the withholding tax (WHT) exemption to Belgian sourced interest paid to foreign Alternative Investment Funds (AIF). Read more in this PwC news item.
Canada
Canada releases draft Global Minimum Tax Act to implement Pillar Two
Canada has released its draft Pillar Two implementing legislation as a new act, called the Global Minimum Tax Act (GMTA). The GMTA is generally aligned with the OECD model rules and OECD commentary, and to ensure consistency it includes a provision stating that it is to be interpreted consistently with the OECD model rules, the OECD commentary and future guidance released by the OECD. However, the structure and drafting of the GMTA differs from the model rules in many respects. The draft legislation confirms that the Canadian Income Inclusion Rule (IIR) and Domestic Minimum Top-up-Tax (DMTT) would apply for fiscal years of MNE groups beginning after 30 December 2023. Read more in this PwC Tax Insights.
Draft legislative proposals released
The Department of Finance released an extensive package of draft legislative proposals on 4 August, many of which have been outstanding for some time, to implement numerous new and previously announced tax measures. These draft legislative proposals cover a wide variety of tax measures and many have been long awaited by taxpayers and tax practitioners alike. This PwC Tax Insights highlights the income‑tax‑related proposals included in this release. The federal government has launched public consultations on the proposals, with comments to be submitted by 8 September 2023 (or by 29 September 2023 for submissions on the Global Minimum Tax).
Updated legislation ─ Excessive interest and financing expenses limitation (EIFEL) regime
The Department of Finance has released an updated version of the draft legislation to implement the excessive interest and financing expenses limitation (EIFEL) rules (August 2023 release). The EIFEL rules are intended to restrict Canadian taxpayers’ interest deductions based upon a percentage of their “tax‑EBITDA.” The latest version of these rules includes significant changes to their application for controlled foreign affiliates (which were first included in the updated draft legislation released in November 2022), as well as some other significant administrative changes. This PwC Tax Insights summarises the key changes to the rules between the November 2022 release and the August 2023 release.
Germany
Government bill for a law to implement the global minimum taxation adopted
On 16 August 2023, the Federal Cabinet adopted the government's draft bill on the implementation of Council Directive (EU) 2022/2523 to ensure minimum global taxation with other accompanying measures. The draft was officially published on 17 August 2023. Whilst the government draft issued on 16 August considers both additional points raised in the OECD Guidance of February 2023 and comments received from associations, it does not currently consider the guidance published by the OECD in July. Read more in this PwC blog.
Extended trade tax deduction for compensation payment in connection with premature termination of lease
If the parties to a rental agreement mutually and prematurely settle the ongoing dispute on the validity of the rental agreement by way of final payment of the lessee, the lessor is entitled to claim the extended trade tax deduction for use of own real estate according to Section 9 No. 1 2nd Sentence Trade Tax Act. The Supreme Tax Court agreed with the decision of the lower tax court, which granted the extended deduction and rejected the appeal of the tax office as unfounded. Read more in this PwC blog.
Transfer of assets of an investment fund as part of spin-off
On 25 August 2023, the Federal Ministry of Finance issued a circular on the transfer of assets from an investment fund within the meaning of Chapter 2 of the Investment Tax Act to a new investment fund as part of a spin-off. Read more in this PwC blog.
Hong Kong
Pillar Two in Hong Kong: Not yet a sticky wicket?
In this episode of Cross-border Tax Talks from 23 August, Doug McHoney (PwC's International Tax Services Global Leader) and Jesse Kavanaugh (PwC Hong Kong’s Tax Reporting & Strategy Leader) discuss the state of play of Pillar Two in Hong Kong, trends regarding safe harbours and data collection, modelling and calculations challenges, the centralised and decentralised approaches to Pillar Two inherent to the region, and the Hong Kong legislative process. They also touch on the addition of Hong Kong to the EU’s ‘grey list’ and the recent introduction of the Foreign Source Income Exemption (FSIE) Regime for Passive Income.
India
Receipts from ILP and consortium membership are not taxable as FIS; Receipts from sponsorship assignments are taxed as FIS
The Mumbai bench of the Income-tax Appellate Tribunal has concluded that for a receipt to be covered within the ambit of fees for included services (FIS) as defined under Article 12 of the India-USA double tax treaty read with the Memorandum of Understanding to the treaty, the taxpayer’s services must not only be of technical nature, but must also make available technical knowledge, experience, skill, know-how, etc. to the recipient of such technical services. Moreover, the Tribunal confirmed the inclusion of receipts from customised sponsorship assignments as FIS because the taxpayer made the technology available to the sponsor by undertaking specific research, allowing the sponsor to derive an enduring benefit from the same. Read more in this PwC Tax Insights.
Interconnectivity charges received by a non-resident telecom operator from an Indian telecom service provider not taxable as ‘royalty’ as per the Act and the India-Spain double tax treaty
Relying on various High Court and Income-tax Appellate Tribunal (Tribunal) rulings, the Bangalore bench of the Tribunal reaffirmed the view that interconnectivity charges received by a non-resident telecom operator from an Indian telecom service provider will not be considered as ‘royalty’ income as per the provisions of the Income Tax Act, 1961 and the India-Spain double tax treaty. Read more in this PwC Tax Insights.
Employees travelling to India does not create a fixed place PE if they do not undertake core business activities in India, and the activities are limited to stewardship or preparatory or auxiliary in nature
The Delhi bench of the Income-tax Appellate Tribunal rejected the Department’s contention that employees of the foreign company visiting India creates a permanent establishment (PE) when they do not undertake core business activities in India. The Tribunal observed that the visiting employees neither carried out any core business activities nor any activity for the sale of licence from India. The purpose of their visit was in the nature of either stewardship or preparatory or auxiliary activities. Accordingly, the Tribunal concluded that no part of income from software licensing fees can be attributed to the PE. Read more in this PwC Tax Insights.
Ireland
Annual Taxation Report
The Minister for Finance, Michael McGrath TD, has published the Department’s 6th Annual Taxation Report, analysing the structural features of the Irish tax system. The taxation report examines the Irish tax system from a long-term, structural perspective. Read more in this press release.
Company reconstructions without change of ownership
The Tax and Duty Manual Part 12-03-04 – Company Reconstructions without change of ownership – has been updated (in paragraphs 1 and 6) to reflect amendments made to section 400 TCA 1997 as a result of the introduction of the Interest Limitation Rules in Part 35D in Finance Act 2021.
R&D corporation tax credit
The Irish Revenue has released a new manual on claiming the R&D corporation tax credit. The manual provides operational guidance on the credit under sections 766C, S766D, S766(4D) or S766A(4C) of the Taxes Consolidation Act 1997.
Luxembourg
Luxembourg releases draft law to implement global minimum tax
On 4 August 2023, the Luxembourg draft law (n°8292) to implement the global minimum tax was released which would transpose the EU Pillar Two Directive into domestic law. The text of the draft law strictly adheres to the text of the EU Pillar Two Directive, with some additions such as for the Transitional Safe Harbour Rules and the QDMTT. Certain aspects remain unresolved, such as the possibility to rely on the elections foreseen in the OECD Administrative Guidance issued in February and July 2023, and potential future guidance. Read more in this PwC news alert.
Modernisation of Luxembourg's accounting law: a new Draft Bill sets the tone!
Draft bill 8286 was recently released, which aims to overhaul Luxembourg accounting law applicable to undertakings (the New Law). The aim is to modernise the law of 19 December 2002 (the Accounting Law), and to group all accounting requirements into one single law (currently in the commercial code, commercial law and accounting law), expanding at the same time the scope of the Accounting Law to FCPs (Fonds Commun de Placement), temporary commercial companies, commercial companies in participation, civil companies, agricultural associations, mutual insurance associations and pension-savings association. The changes are expected to give more clarity for all users/readers, to clarify requirements which were not self-explanatory and to integrate accounting doctrines or market practices in the Accounting Law. Read more in this PwC news alert.
Middle East
Saudi Arabia: Approved amendments to the RETT Implementing Regulations
The Minister of Finance and Chairman of the Board of Directors of Zakat, Tax and Customs Authority has approved amendments/additions to certain provisions of the RETT Implementing Regulations. See this PwC news item for highlights of the approved amendments.
New Zealand
September 2023 Tax Tips Alert: 2023 general election tax policy update
With the general election date set for 14 October 2023, New Zealand’s political parties have been announcing various tax policy proposals to capture voters' interest and support. Tax, as usual, forms a key part of the various parties’ platforms. From tax cuts to universal basic incomes, and from tax-free thresholds to flat tax rates, this edition of PwC’s Tax Tips summarises what various parties have shared with the public to date.
Russia
Russia suspends double tax treaties with "unfriendly" states
On 8 August 2023, a presidential decree was published, under which the selected provisions of international double tax treaties must be suspended until "the respective foreign states eliminate the violations of legitimate economic and other interests of the Russian Federation." Read more in this PwC blog.
South Africa
2023 Draft tax legislation
On 31 July 2023, National Treasury and the South African Revenue Service (SARS) published the 2023 draft tax legislation for comment (due by 31 August 2023).
- Foreign Business Establishment amendment
The draft 2023 Taxation Laws Amendment Bill proposes potentially far reaching amendments to the Foreign Business Establishment (FBE) exemption for Controlled Foreign Companies (CFCs) of South African residents. In summary, it is proposed that in order to qualify for the FBE exemption all the important functions for which the CFC is compensated should be performed by the CFC or another group CFC located and subject to tax in the same country as the CFC’s fixed place of business. Read more in this PwC alert. - Reviewing the Practice Note 31 principles
The draft legislation proposes to withdraw Practice Note 31 of 1994 (PN31) and to insert a new section in the income tax legislation to allow a deduction for expenditure incurred by a company in the production of interest income accruing from another group company (as defined) provided certain requirements are met. The proposed amendments will come into effect on 1 January 2024 and apply in respect of years of assessment commencing on or after that date. Read more in this PwC alert.
PwC Tax Synopsis - July 2023
This edition includes: 1) The Principal Purpose Test (“PPT”) in Double Tax Treaties: What it means for multinational groups; 2) What happens in the arena stays in the arena - or does it? and 3) SARS watch.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
Tunisia
Tunisia ratifies MLI
On 24 July, Tunisia deposited its instrument of ratification for the Multilateral BEPS Convention (MLI), which now covers around 1850 bilateral tax treaties. The Convention will enter into force on 1 November 2023 for Tunisia. See this OECD item.
US
Replacement of NAFTA addressed for certain income tax treaties; Russia suspends US-Russia income tax treaty
- The IRS has published competent authority agreements with Denmark, Luxembourg, Mexico, and Malta, effective 1 July 2020, pursuant to which, on a bilateral basis, references in the respective tax treaty with the United States to the North American Free Trade Agreement (NAFTA) will be treated as references to the United States-Mexico-Canada Agreement (USMCA), which entered into effect on 1 July 2020.
- According to press reports, Russian President Vladimir Putin signed a decree on 8 August suspending the benefits of double tax treaties between Russia and 38 countries, including the United States. The US-Russia tax treaty contains a termination article, which requires that specific diplomatic procedures be undertaken for providing at least six months’ notice of the termination, and the termination article provides specific timing for when such termination has effect (i.e., after 1 January of the year following the expiration of the six-month period).
Read more in this PwC Tax Insights.
Inflation Reduction Act: Credit monetization proposed regulations create strategic opportunities
Temporary and proposed regulations provide guidance on IRA credits to encourage production of clean energy, reduce carbon emissions, and promote domestic manufacturing. The IRS guidance provides a number of new details around important logistical elements of transferability. Both transferors and transferees should analyse the nuanced eligibility requirements for these credits in the year claimed and during recapture periods. One common credit monetization question for infrastructure, real estate, and private equity funds was how refundability and transferability would work in a partnership context since many partnerships are owned by both entities eligible for direct pay (i.e., tax-exempt) and entities eligible for transferability (i.e., taxable). In response, Treasury and the IRS indicated that the partnership is the relevant entity for these purposes. As a result, the proposed regulations provide that a partnership may monetize via direct payment only for credits related to clean hydrogen, carbon sequestration, and advanced manufacturing. For all other eligible tax credits, a partnership may only elect transferability, without regard to whether one or all of its partners are tax-exempt. Read more in this PwC Tax Insights.
Proposed regulations on information reporting for digital assets
Treasury and the IRS have released proposed regulations on information reporting (Forms 1099, etc.) and calculation of gain or loss for digital assets. The 2021 Infrastructure Investment and Jobs Act expanded the rules regarding how digital assets should be reported by brokers. The proposed regulations provide guidance for how brokers and payers are to comply and provide rules to determine the amount realised for purposes of computing gain or loss upon the sale, exchange, or other disposition of digital assets, as defined in Reg. sec. 1.6045-1(a)(19). Read more in this PwC Tax Insights.
Ways and Means Committee continues inquiries into political activities of tax-exempt organisations
The Ways and Means Committee recently announced that it is conducting an inquiry into whether Section 501 tax-exempt organisations are complying with statutory and regulatory prohibitions on certain political activities and whether foreign sources of funding are being funnelled through tax-exempt organisations to influence US elections. Read more in this PwC Tax Insights.
Policy on Demand series
- Companies face guessing game on treatment of R&D costs
Beginning in the 2022 tax year, companies must capitalise and amortise rather than expense R&D costs. Congress has not yet passed a legislative fix, so companies preparing to file their 2022 tax returns are asking how they should treat their R&D costs. Watch here. - One year after IRA, next steps for energy credits
In this episode from 21 August, Wendy Punches discusses the overwhelming response to the Inflation Reduction Act energy credits a year after enactment and how companies considering investing in these incentives should exercise due diligence and seek to understand the impact of the credits. - Soft landing still possible after US debt downgrade
In this episode from 7 August, Karl Russo shares his insights on recent economic developments, including the downgrade of the US long-term debt rating, the Federal Reserve’s most recent interest rate increase, the remarkable stability in the labour market, and prospects for a soft landing. - Week in Review
25 August - Some House Republicans are making demands around government spending that are increasing the odds of a partial government shutdown. However, in this episode, Rohit Kumar encourages companies to focus on another group of House Republicans - the ones heading to Europe to meet with OECD representatives to express their concerns about Pillar Two.
Tax Readiness webcast series
- Tax Readiness: Recent controversy trends and their impact on your business
Tax Controversy is top of mind for companies and is a hot topic for many executives, given the recent high-profile cases in the news. On this webcast taking place on Tuesday 26 September at 7pm, we will explore proactive steps companies should be taking to better prepare their tax department for the risk of controversy. We will also dive into what companies can expect from the IRS and how they will use the funding from the Inflation Reduction Act. Register here. - Tax Readiness: Monetizing energy tax credits - Direct pay, transfer, and tax equity
This webcast which took place on 15 August, examined the ins and outs of direct payment and transfer of many of the clean energy credits extended or enacted by the Inflation Reduction Act of 2022. Our panel of specialists discussed issues related to financing clean energy projects. Watch the replay here. - Tax Readiness: Changing the game for tax with Generative AI
The transformative power of generative AI has the potential to revolutionise the way we work in tax. Watch the replay here from this webcast held on 19 July, where our panel of specialists discuss how tax functions can harness the power of GenAI to enhance operations, drive value and why prioritising a responsible, trusted approach is critical to achieve sustained outcomes.
State and local tax
- New York proposes corporate tax reform regulations
The New York Department of Taxation and Finance recently issued its long-awaited proposed regulations implementing the 2014 corporate tax reform legislation and subsequent legislative changes. The proposed regulations are not yet authority, but they reflect the Department’s current thinking on issues regarding the State’s corporate tax reform legislation. Note that the New York City Department of Finance intends to propose and adopt its own corporate tax reform regulations as well. Read more in this PwC Tax Insights. - New York formally proposes Corporate Tax Reform regulations on sourcing of receipts from “passive investment customers,” other rules
The proposed regulations would provide guidance on how asset management corporations should source their management or advisory fees. The new 2023 version makes noteworthy changes from the 2022 draft, including now requiring that management fees from passive investment customers be sourced to the investor/ultimate beneficiary location, but if that cannot be determined, the sourcing reverts to where the contract is managed.Read more in this PwC Tax Insights. - Michigan Supreme Court rejects alternative apportionment of business sale
In a 4-3 decision, the Michigan Supreme Court recently held that application of Michigan’s statutory apportionment formula did not violate the United States Constitution when a taxpayer sold its business in a short year in which a large percentage of the business activity occurred in Michigan. The court found that the taxpayer did not satisfy alternative apportionment requirements because the taxpayer failed to prove that statutory treatment led to a grossly distorted result or operated unconstitutionally to tax the extraterritorial activity of the taxpayer. Read more in this PwC Tax Insights.
Further information
You can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page. A back catalogue of previous webcasts and other resources are available on our US tax reform hub here.
Vietnam
MLI effective for Vietnam
The BEPS multilateral instrument (MLI) became effective for Vietnam from 1 September 2023. Vietnam has listed 75 double tax agreements as "covered agreements" for the purposes of the MLI.