Two weeks to 10 February 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 - OECD publishes Administrative Guidance
The OECD published the long awaited Administrative Guidance (‘guidance’) on the Pillar Two Global Anti-Base Erosion Rules (GloBE Rules) on 2 February. The guidance was approved by the OECD/G20 Inclusive Framework on BEPS (IF) and is therefore not subject to public consultation. It addresses a wide range of issues identified by IF members as most in need of immediate clarification and simplification. The guidance will be incorporated into a revised version of the GloBE Commentary and Examples that will be released later this year, replacing the original version issued in March 2022. While the OECD indicated that this guidance represents the ‘final piece of work’ on the GloBE Rules, that IF members committed to deliver as part of the GloBE implementation framework, it also stated that the IF will continue to release further guidance on an ongoing basis (ie in smaller packages) to ensure that the GloBE Rules continue to be implemented and applied in a coordinated manner. Significantly, the guidance confirms the status of the United States’ minimum tax (known as the Global Intangible Low-Taxed Income, or 'GILTI') as a CFC Tax Regime under the GloBE Rules. It also sets out a mechanical allocation formula for GILTI and other ‘Blended CFC Tax Regimes,’ and provides guidance on Qualified Domestic Minimum Top-up Taxes (QDMTT) and the treatment of (some) credits and incentives; all important issues for the business community. For further detail, see our PwC Tax Policy Alert and further resources in our OECD section below.
HMRC’s latest Transfer Pricing (TP) and Diverted Profits Tax (DPT) statistics covering April 2021 to March 2022 demonstrate that transfer pricing and tackling profit diversion remain a key priority for HMRC investigators
HMRC’s statistics report across a variety of areas, including TP enquiries, Advance Pricing Agreements (APAs), Mutual Agreement Procedures (MAPs), Advance Thin Capitalisation Agreements (ATCAs), DPT investigations and Profit Diversion Compliance Facility cases (PDCFs) highlighting the additional yield, number of cases and length of time to resolve cases, across each area. Read more.
Finding the super-deduction sweet spot
With the super-deduction set to end on 31 March 2023 there is set to be lots of activity to ensure capital investments are made before this date to make the most of the 130% temporary relief - but will all taxpayers benefit equally? Read more.
Thin capitalisation - HMRC updates guidance
HMRC made 37 updates to its International Tax Manual relating to thin capitalisation on 10 and 11 February, see here.
Approved offshore reporting funds
HMRC has updated the list of approved offshore reporting funds to include the latest funds that have entered the Reporting Fund Regime. The list has been updated to include the funds that have entered as at 1 February 2023. View the updated list.
EU
PwC DAC7 webcast
With the introduction of the DAC7 legislation, digital platform operators will be required to report on sellers for the year 2023 for the first time in 2024. Join our panel of specialists on Tuesday 14 February at 3pm to get guidance and background information. There will be time for discussion and questions, and we’ll provide some practical examples. Register here.
For further updates in relation to DAC7, please see our Digital tax megabyte for January 2023 in the International section below.
ATAD 3 (EU “Unshell” Directive) - where do we stand today?
The EU Council published a draft proposal for a new EU directive (“ATAD III”) on 22 December 2021, laying down rules to prevent the misuse of shell entities for tax purposes. For the Directive to be implemented, there must be unanimous agreement, and we’re not there yet. However, in the meantime we see that third party service providers across the financial services industry are effectively doing the job of the Directive by already asking their customer base to confirm that there is substance to their entities (not just limited to European companies) and actively choosing not to work with customers using entities based in certain jurisdictions. Read more in this PwC article.
European Commission set to adopt the SAFE and FASTER package in June 2023
According to the tentative agenda of the College of Commissioners published on 17 January 2023, the SAFE (Securing Activity Framework of Enablers) and FASTER (Faster and Safer Tax Excess Refund for WHT) proposals will be adopted as a package on 7 June 2023. The SAFE initiative aims to tackle the role that enablers play in facilitating arrangements or schemes that lead to aggressive tax planning and/or tax evasion. The FASTER initiative aims to introduce a common EU system for withholding tax (WHT) relief procedures for cross border investors in the securities market.
State aid: Commission consults Member States on proposal for a Temporary Crisis and Transition Framework
The European Commission has sent to Member States for consultation a draft proposal to transform the State aid Temporary Crisis Framework into a Temporary Crisis and Transition Framework to facilitate and accelerate Europe's green transition. Read more in this press release.
EU-Moldova: New agreements on closer cooperation in the areas of customs and taxation
The European Commission signed two agreements between the EU and Moldova on 7 February, which cements Moldova’s participation in the EU’s Customs and Fiscalis programmes. Fiscalis is the EU’s programme for cooperation in the field of taxation. Amongst other things, it allows tax administrations to work together in fighting tax fraud, evasion and aggressive tax planning. Read more in this EC news item.
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 6 February includes: 1) EU Summary Report on Tax Enablers (SAFE) Consultation; 2) OECD Guidance on Minimum Tax – Pillar 2; 3) CFE Opinion Statement on EU Corporation Taxation System (BEFIT) Consultation; 4) EU Publishes Green Deal Industrial Plan; and 5) Save the Date: CFE Forum – 20 April 2023 – “Towards a More Cohesive European Fiscal Union? Minimum Tax & VAT in the Digital Age”. Visit their latest news page here. - Global Tax Top 10 - January 2023
This issue covers the following: 1) Anticipated EU Tax Developments in 2023; 2)OECD Appoints New Director of Centre for Tax Policy & Administration; 3) ECOFIN: Swedish Presidency Priorities; 4) Updated OECD Pillar 1 & 2 Analysis; 5) EU Consultation on VAT Package for Travel & Tourism; 6) CFE Opinion Statement on EU Corporate Taxation System (BEFIT) Consultation; 7) OECD Appoints New Deputy Secretary-General; 8) EU Consultation on Administrative Cooperation in VAT; 9) OECD Publishes Revised Mutual Agreement Procedure; and 10) Save the Date: CFE Forum – 20 April 2023 – ‘Towards a More Cohesive European Fiscal Union? Minimum Tax & VAT in the Digital Age’. - CFE Opinion Statement on EU Corporation Taxation System (BEFIT) Consultation
The CFE has issued an Opinion Statement on the European Commission Public Consultation on the Introduction of a New Corporate Taxation System in Europe (BEFIT).
OECD
Pillar Two
- OECD releases administrative guidance for implementation of the global minimum tax
As noted above, the OECD released Administrative Guidance on the Pillar Two Global Anti-Base Erosion Rules (GloBE Rules) on 2 February. The guidance was approved by the OECD/G20 Inclusive Framework on BEPS (IF) and is therefore not subject to public consultation. It addresses a wide range of issues identified by IF members as most in need of immediate clarification and simplification. Read more in this PwC Tax Policy alert. For further detail, see: - OECD provides helpful Pillar Two guidance - Policy on Demand episode
- PwC Belgium news item and PwC’s Tax Bites podcast: OECD issues Administrative Guidance on Pillar 2
- Pillar Two consultation documents
The OECD published two consultation documents relating to Pillar Two on 20 December, the first anniversary of the issue of the Pillar Two Model Rules. These documents were open for comments until 3 February 2023. - Pillar Two - GloBE Information Return
- Tax Certainty for the GloBE Rules
- FASB staff weighs in on tax accounting for OECD Pillar Two taxes
The FASB staff has indicated that they believe the OECD Pillar Two tax is an alternative minimum tax under US GAAP. Read more in this PwC alert and our Policy on Demand episode. - World Bank report on Global Minimum Tax (GMT) implementation
The World Bank has released a new report titled "Global Minimum Tax: From Agreement to Implementation - Policy Considerations, Implementation Options, and Next Steps". The paper focuses on implementation of the GMT. It provides an overview of the core GMT rules, examines implementation by countries thus far, evaluates the key policy considerations (including the impact on tax incentives), and provides a framework for evaluation of the implementation options.
OECD releases manual on the handling of multilateral mutual agreement procedures and advance pricing arrangements pursuant to tax certainty agenda
In line with the Forum on Tax Administration's tax certainty agenda, the OECD has published a Manual on the Handling of Multilateral Mutual Agreement Procedures and Advance Pricing Arrangements, intended to be abbreviated as the MoMA.
OECD releases 2021 MAP statistics – observations from the Mainland China and Hong Kong SAR perspectives
The OECD recently released the 2021 statistics for mutual agreement procedure (MAP). This PwC Tax Insights provides observations from the Mainland China and Hong Kong SAR perspectives.
OECD Tax and Development Days 2023
This event is taking place on 15-16 February 2023 and will provide an update on some of the OECD's initiatives to strengthen tax capacity and improve tax policy and compliance in developing countries and explore future challenges. You can read more and register here.
Other territories
International
International Tax News - Edition 115 Jan 2023
Among the topics featured in the latest edition are: 1) Argentina - Complementary information regime for international transactions; 2) Italy - Italy approves 2023 Budget Law; 3) Tanzania - Tanzania enacts digital services tax; and 4) Mexico - Tax changes for legal representatives of non-Mexican tax residents.
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 8 February, includes: 1) draft update ESS regulations for Kenya; 2) reminders of the deadline for feedback on DAC7 implementing regulations and registering for our webcast on DAC7; and 3) a Massachusetts State nexus decision.
Digital tax megabyte for January 2023
This edition, to the end of January, includes: 1) measures taken just prior to the end of December 2022 by France, Germany, Spain (with later Parliamentary discussion), Belgium, Finland, Croatia (with subsequent consultation on some details) and Slovenia on DAC7 in relation to reporting by digital platform operators; the OECD has meanwhile published a set of FAQs on its Model Rules for such operators; 2) the European Commission has published for consultation a draft Implementing Regulation for determining the DAC7 equivalence of similar regimes in non-EU countries and also sent a notice to non-notifying Member States; 3) Tanzania has also published a notice on registration by non-resident electronic service providers; and 4) there has been some further progress in the challenges to Maryland's digital advertising tax.
Environmental, Social and Governance (ESG) - Purpose and Profitability
Organisations are under growing pressure to address their impact on the environment and society. But how do they make the right commitments, and how do they combine expertise and insights with technology, to ensure their response is meaningful and measurable? Watch this episode to understand more about meeting ESG commitments, where to begin and how to report progress. For more ESG insights, visit our dedicated ESG webpage.
Australia
Monthly Tax Update - February 2023
Welcome to the February 2023 edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
ATO releases decision impact statement on exploration rights
The Australian Taxation Office (ATO) recently released a draft decision impact statement (DIS) in response to the Full Federal Court’s decision in Shell Energy Holdings Australia Limited v FC of T [2022] FCAFC 2 (Shell). The Shell case being a dispute as to the availability of a deduction under section 40-80 of the Income Tax Assessment Act 1997 which, until 2013, had allowed an immediate deduction for depreciating assets, including mining, quarrying and prospecting rights (MQPRs), that are first used for exploration. However, it will be of ongoing relevance in relation to: 1) the important transitional rule in section 40-77 of the Income Tax (Transitional Provisions) Act 1997 which governs whether a MQPR is a depreciating asset or capital gains tax asset; 2) what constitutes “exploration” for tax purposes; and 3) when an intangible asset is considered held for “first use”, which governs from when depreciating deductions under Division 40 are available. Read more in this PwC tax alert.
Austria
Private Foundations: New standpoint of the Austrian Supreme Administrative Court on the transfer of hidden reserves
As a general rule, section 13 para. 4 KStG (Austrian Corporate Income Tax Act) permits Austrian private foundations to carry over hidden reserves from the sale of investments (in which the foundation or its legal predecessor held a share of at least 1% within the last five years) to substitute investments. These substitute investments must involve the acquisition of a share of more than 10% of an entity (“substitute acquisition”). A new Austrian Supreme Administrative Court case clarified whether it is also considered such a preferential substitute acquisition if it takes the form of an ordinary capital increase for a company in which the foundation already holds a 100% share. Read more in this PwC news item.
Belgium
See here for latest updates.
PwC’s Tax Bites podcast: OECD issues Administrative Guidance on Pillar 2
In this episode, we discuss our first impressions of the 111-page Administrative Guidance on Pillar 2 published by the OECD on 2 February 2023. A wide range of issues related to the GloBE Rules and Commentary were addressed in the guidance, and our experts also welcomed the additional clarification and examples, including those on the Qualified Minimum Top-up Tax (QDMTT) and the treatment of taxes paid under the US GILTI regime. Tune in to get our first take on the Administrative Guidance!
New circular letter published on 30% EBITDA rule
On 12 January 2023, a new circular letter (2023/C/8) was published regarding the 30% EBITDA regulation (not available in English). The new circular letter is intended to summarise the guidance that is currently available to provide a comprehensive overview of the 30% EBITDA rule, and to provide further guidance on the practical application of the rule. This circular letter replaces Circular Letter 2021/C/87 which relates to assessment year 2020. No new technical positions have been taken by the Belgian tax authorities compared to the earlier communications. Read more in this PwC news item.
Canada
The underused housing tax - new compliance requirement for many owners of Canadian residential property
The federal Underused Housing Tax Act (UHTA) became effective on 1 January 2022. As a result, a significant number of Canadian residential property owners will be required to file their first annual underused housing tax (UHT) information return in respect of their property by 1 May 2023, or face minimum penalties of $5,000 for individuals or $10,000 for corporations – even if no tax is payable. The 2021 and 2022 federal budgets described the UHT as a 1% annual tax on the value of vacant or underused Canadian residential property held by certain non‑Canadian owners. However, unless the owner is an “excluded owner,” various Canadian owners will have a filing obligation, including corporations that are not publicly traded and certain trustees and partners – even in situations when the UHT is not payable. Accordingly, both Canadians and non-Canadians will be impacted. This PwC Tax Insights provides details of this new compliance requirement and the steps that owners of residential property need to consider.
Germany
Future expenses not to be included when calculating maximum foreign tax credit
The Supreme Tax Court has ruled that, when determining the amount of foreign withholding tax credit against German income or corporation tax, expenses for future earnings are not to be included in the calculation. In the case concerned, this improved the plaintiff’s tax credit potential. This decision (published on 26 January 2023) contrasts with the view held by the tax authorities. Read more in this PwC blog.
Provision for transition from imputation system to half-income method in part incompatible with Basic Law
Germany’s Federal Constitutional Court has held that the 2010 rules governing the transition from the tax credit (imputation) system to a dividend exemption system are partially incompatible with the German Basic Law. The legislator is therefore obliged to retroactively eliminate this constitutional violation by 31 December 2023. Read more in this PwC blog.
Greece
Tax treatment of temporary differences in case of distribution
The Independent Authority for Public Revenue (AADE) has recently attempted to resolve the longstanding issue of the tax treatment of profits of legal persons, when they distribute or capitalise profits that have not been subject to tax due to temporary differences. Read more in this PwC alert.
Hong Kong
Hong Kong tax review 2022
Hong Kong remains determined to enhance international tax cooperation and competitiveness amid challenges. PwC’s Hong Kong Tax Review 2022 summarises the significant tax updates in 2022 and previews the upcoming tax developments in 2023.
India
Budget 2023
Union Budget 2023–24 was presented by Finance Minister Nirmala Sitharaman on 1 February and builds on the vision set out in the previous budgets, providing a blueprint for steering the economy towards a sustained high-growth trajectory in the 25-year-long lead-up to India @100. Visit our Budget webpage where PwC India’s experts share Budget 2023 expectations from industry stakeholders, analysis, as well as an understanding of the budget implications on the Indian Economy.
- India Budget 2023 - Impact on foreign investors and multinationals
Budget 2023 continues with the theme of providing a stable tax regime in India with a focus on ease of doing business. Foreign companies should monitor these developments closely and be especially mindful while planning capital infusions into Indian subsidiaries in line with the proposals. Read more in this PwC Tax Insights. - Webcast - India Budget 2023: Ushering in India's decade
Register here to watch the replay where our panel of specialists discuss how India Budget 2023 may affect foreign investors and multinational companies with Indian operations.
Taxability of uplinking and playout services - meaning of royalty and fees for technical services
The Delhi bench of the Income-tax Appellate Tribunal has held that that the receipts from Disaster Recovery Uplinking Services (uplinking services), which primarily involve a process wherein signals are taken from the transmission equipment and sent to the satellite for broadcasting, cannot be categorised as a royalty for the use or right to use of a process under Article 12 of the India-Singapore double tax treaty. It also held that Disaster Recovery Playout Services (playout services), which merely involve the provision of uninterrupted availability of the playout service at a predetermined level, are not in the nature of fees for technical services (FTS). This ruling is relevant for taxpayers providing various satellite-based telecommunication services such as space segment capacity services, downlinking and distribution services, and digital news gathering services. It holds, making reference to other rulings, that royalty in relation to ‘use of a process’ envisages that the payer must use the ‘process’ on its own and bear the risk of its exploitation. ‘Know how’ or ‘intellectual property’ should be involved in the provision of various satellite-based telecommunication services to classify the receipts as royalty. Moreover, services which merely involve the provision of uninterrupted facility at a predetermined level and without providing the customers with technology knowledge may not be taxable as FTS, as they do not make available any technical knowledge, experience, skill, know how, or process or consist of the development and transfer of any technical plan or technical design. Read more in this PwC Tax Insights.
Italy
Italy approves 2023 Budget Law
Italy has enacted Budget Law for 2023, a summary of which can be found here. It includes:
- Italy introduces permanent establishment investment management exemption
Italy’s 2023 Budget Bill introduced, in the Italian Income Tax Act (IITA), an Investment Management Exemption (IME) which is effective as of 1 January 2023. The IME is a ‘safe harbour’ that allows eligible foreign investment vehicles (including private equity and hedge funds) and controlled entities to avoid being deemed a permanent establishment (PE) in Italy due to local activities carried out by their investment managers. Read more in this PwC Tax Insights. - Italy enacts Budget Law for 2023 including a limitation to deductibility of costs under conditions
Budget Law for 2023 includes a measure limiting the deductibility of expenses and other deductible items arising from transactions with companies/professionals resident or located in an EU blacklisted jurisdiction. Any cost in excess of the “normal value” should be disallowed. “Normal value" is “the average price or consideration charged for goods and services of the same or similar type, in conditions of free competition and at the same marketing stage, at the time and in the place in which the goods or services were acquired or provided or at the nearest time and place”. There is a safeguard clause: the deduction limitation does not apply if the company proves that relevant transactions correspond to an actual economic interest and have been concretely carried out, or where the non-resident company falls within the scope of application of the Italian CFC rules.
Japan
Revisions to Japan’s E-Storage Act in the 2023 Tax Reform Proposals
Japan’s Ruling Party released the FY2023 tax reform proposals on 16 December 2022, which included proposed revisions to the Electronic Book and Document Storage Act (the ‘eStorage Act’). The proposed revisions would ease the requirements for companies to obtain the ‘quality electronic books’ designation, as well as relax the conditions under which taxpayers can electronically store documentation via scanning. Further, under the Proposal, taxpayers who can provide a valid reason as to why they are unable to maintain e-Transaction data digitally in compliance with e-Storage Act requirements would be able to keep data without satisfying such requirements (that is, they could maintain the documents in hard form). Read more in this PwC update.
Middle East
Qatar publishes Law No. 11 of 2022 amending several provisions of the Income Tax Law No. 24 of 2018
On 2 February 2023, Qatar published Law No.11 of 2022 amending several provisions of the Income Tax Law No. 24 of 2018 in the official Gazette. The amendments, effective from 2 February 2023 (ie the date of their publication in the official Gazette), have introduced a number of important changes to the Tax Law. The details of some of these key changes are expected to be issued by the General Tax Authority (“GTA”) as amendments to the Executive Regulations of the Tax Law in the near future. Read more in this PwC tax alert.
Moldova
EU-Moldova: New agreements on closer cooperation in the areas of customs and taxation
As reported above, the European Commission signed two agreements between the EU and Moldova on 7 February, which cements Moldova’s participation in the EU’s Customs and Fiscalis programmes. Fiscalis is the EU’s programme for cooperation in the field of taxation. Amongst other things, it allows tax administrations to work together in fighting tax fraud, evasion and aggressive tax planning. Read more in this EC news item.
Poland
Poland amends withholding tax provisions relaxing the pay and refund mechanism
On October 25 2022, an Act amending the corporate income tax law and certain other acts was published in the Journal of Laws. This Act amends, among others, the regulations relating to WH-OSC statements. These changes also provide for the repeal of the obligations of remitters (including issuers) with regard to withholding tax on interest and discount on treasury securities (i.e. treasury bills and government bonds), as well as the introduction of full exemption on dividends paid within the Polish holding company regime. For more information see our PwC Insight. PwC has developed a digital tool, our WHT Navigator, that helps remitters and taxpayers maintain the due diligence required by the new regulations. It helps establish how to secure WHT preferences, gather all the documents needed to demonstrate due diligence procedures, and monitor the expiry of the document's validity. For more information see our PwC Insight.
South Africa
Tax Synopsis - January 2023
The latest edition covers: 1) Tax Court Rules; 2) VAT Documentary requirements: Repossession or surrender of goods; and 3) SARS watch.
Spain
Tax haven list update
Spain has submitted an update to the Spanish list of non-cooperative jurisdictions for public consultation. The update includes changing the term ‘tax haven’ to ‘non-cooperative jurisdictions’ and a change of criteria for additions to the list. The participation exemption does not apply to dividends from those jurisdictions. The list does not include all EU blacklist territories: the Bahamas, US Virgin Islands and Panama are not in the Spanish list. For more on measures taken by the EU27 in connection with the EU blacklist, see PwC’s overview of defensive measures.
Sweden
New rules on cross-border demergers and conversions within the EU
According to European case law, companies are entitled to tax neutral cross-border mergers, demergers and conversions within the EEA, in order to protect the freedom of establishment. After a number of decisions issued by the Court of Justice of the European Union, there was a need to create new harmonised rules on cross-border conversions and divisions across the EEA with further optimization of the current framework applicable to cross-border mergers. EU Directive 2019/2121 was published to supplement the previous adopted regulations and was set to be implemented in domestic law by 31st of January 2023, although several countries will not implement the New Directive by this date. As a result of the New Directive, new rules are implemented to make it possible for Swedish limited liability companies to change their domicile to another EEA country by way of a cross-border conversion. At the same time, the rules for cross-border mergers and divisions will also be updated, to further facilitate cross-border restructurings. Read more in this PwC tax blog.
The Taxonomy Regulation sets requirements for the management of tax risks
In previous articles, we have touched on the increased focus on transparency in the tax area, as well as the need and importance of having a robust model in place regarding the management of the company's tax risks. Now these topics are also included in EU's Taxonomy for Sustainable Investments. Read more in this PwC tax blog.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
ATAD 3 The EU “Unshell” Directive - where do we stand today?
For the Directive to be implemented, there must be unanimous agreement, and we are not there yet. However, in the meantime we see that third party service providers across the financial services industry are effectively doing the job of the Directive, by already asking their customer base to confirm that there is substance to their entities (not just limited to European companies) and actively choosing not to work with customers using entities based in certain jurisdictions. Read more in this PwC article.
Taiwan
Tax update - January 2023
This edition includes: 1) Ministry of Finance releases sample format of Controlled Foreign Company (“CFC”) income disclosure forms to be incorporated in corporate income tax return; and 2) Legislative Yuan passes third reading of draft amendments to Article 10-2 of Statute for Industrial Innovation, which is effective retroactively from 1 January 2023.
US
State of the Union address - President Biden’s tax proposals
In a State of the Union address to a joint session of Congress on 7 February, President Biden called on Congress to support his economic policy agenda that includes reforming the tax code to “reward work and not just wealth.” The President said that he is proposing to increase from 1% to 4% the excise tax on corporate stock repurchases that was enacted in 2022 as part of the Inflation Reduction Act (IRA). He also called on Congress to enact a “billionaire” minimum tax and other corporate and individual tax proposals. The President’s tax proposals will be submitted to Congress as part of his FY 2024 budget. The President’s budget and a Treasury Department “Green Book” general explanation of revenue proposals will be released on 9 March, according to White House officials. Read more in this PwC Tax Insights.
FASB staff weighs in on tax accounting for OECD Pillar Two taxes
The FASB staff has indicated that they believe the OECD Pillar Two tax is an alternative minimum tax under US GAAP. This conclusion is helpful to reporting entities that will need to account for Pillar Two taxes as various jurisdictions begin to enact related legislation. Read more in this PwC alert and also Policy on Demand episode.
New Jersey enacts significant changes to S corporation election
New Jersey has enacted legislation that eliminates the separate state election if an entity has made a federal S corporation election and adjusts the partnership audit regime. Read more in this PwC Tax Insights.
New York proposes to extend increased corporate rates, amend MCTMT, modify PTET
New York Governor Kathy Hochul introduced the state’s FY 24 executive budget on 1 February that would: 1) extend an increased corporate franchise tax rate; 2) amend the definition of pass-through entity taxable income for purposes of the New York State and City Pass-Through Entity Taxes (PTET); 3) amend the definition of net earnings from self-employment for Metropolitan Commuter Transportation Mobility Tax (MCTMT) purposes; 4) tie S corporations at the state level to their federal election; 5) allow the Department of Taxation and Finance to appeal decisions from the Tax Appeals Tribunal; and 6) make other changes. Read more in this PwC Tax Insights.
Policy on Demand series
- State of the Union address will lay out President Biden’s priorities
President Biden will deliver the annual State of the Union address to a joint session of Congress on the evening of 7 February. In this episode from 6 February, Chairman Dave Camp discusses what he expects to hear from the president as he lays out his priorities for the coming year. - OECD provides helpful Pillar Two guidance
On 2 February, the OECD released detailed implementation guidance for the OECD Pillar Two global minimum tax. In this episode from 3 February, Pat Brown and Karl Russo join us to discuss this guidance and what it means for companies. - FASB weighs in on accounting for Pillar Two taxes
On 1 February, the FASB weighed in on how companies complying with the OECD Pillar Two global minimum tax regime should account for the tax. In this episode from 2 February, Jennifer Spang joins us to discuss this new guidance and what it means for companies. - Taxpayers can make the case for addressing unresolved issues
In this episode from 30 January, Todd Metcalf joins us to share his insights on the makeup of the Senate Finance Committee and its tax policy agenda. He encourages taxpayers to make the case for lawmakers to resolve issues leftover from the previous Congress. - Week in Review
- In this episode from 10 February, Janice Mays discusses how recent OECD guidance may result in additional tax for US multinationals and how tax provisions proposed by House Republicans and President Biden will require bipartisan action for passage. She encourages companies to monitor OECD and Capitol Hill developments as we wait for President Biden and the Republicans to release their budget proposals.
- In this episode from 3 February, Andrew Prior discusses helpful Pillar Two international tax guidance released by the OECD and the FASB this week. Domestically, he encourages companies to watch President Biden’s State of the Union address and the Republican response for potential areas of bipartisan consensus and to continue to make their case as Congress searches for a bipartisan path forward on tax legislation.
Cross Border Tax Talks
- Pillar Two: GloBE Return and CbCR Safe Harbours
In this episode from 1 February, Doug McHoney (PwC's US International Tax Services Global Leader) is joined by Mike Olecki, PwC’s International Tax Services Global Technology Leader and partner in the Quantitative Services Tax Practice. Doug and Mike discuss the OECD Pillar Two documents released in December 2022, including the transitional CbCR safe harbour, the potential for a permanent safe harbour, the GloBE Information Return, calculation challenges, and how technology can help.
Tax Readiness webcast series
- Tax Readiness: Deals Outlook - The tax perspective
Join our panel of specialists on Thursday 2 March at 7pm as they review the recently launched US Deals 2023 outlook and discuss key tax issues and opportunities including the new stock buyback excise tax, divestitures, expiring provisions, and state and local taxes. Register here. - Tax Readiness: Tax Policy Outlook
The stakes have rarely been higher for tax executives seeking to manage and plan for business operations in the face of policy divisions among elected officials over the direction of US and global tax policy, and respond to worldwide technological disruption, the lasting impacts of the COVID-19 pandemic on how people work, and an increased focus on environmental, social, and governance (ESG) concerns. Watch the replay from 31 January, where our panel of specialists discuss the details of our annual Tax Policy Outlook. - Tax Readiness: New Year's Resolution - Prepare for Pillar Two!
As 2022 came to an end, the European Union finally adopted the EU Minimum Tax Directive and the OECD released several significant guidance documents related to Pillar One and Pillar Two. EU Member States must now transpose the Directive into their local law by 31 December 2023. Join our panel on Thursday 26 January at 8pm, where they will review these recent developments and cover some of the practical steps that multinationals should be taking now to prepare for the coming changes. Register here. - Tax Readiness: Initial guidance on the new corporate alternative minimum tax
The Inflation Reduction Act imposed a corporate alternative minimum tax based on financial statement income. The corporate alternative minimum tax is effective for tax years beginning after 31 December 2022. Watch this webcast replay from 11 January, where we took a deeper dive into the recently released guidance.
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.