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Two weeks to 15 September 2023

Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.


Draft Finance Bill legislation - R&D tax relief 
The ATT has submitted comments on the draft Finance Bill 2023-24 legislation Corporation tax: research and development published on 18 July 2023.  For PwC’s response on this matter, please contact your usual PwC adviser.

1.5% SDRT charge removal 
There was a welcome announcement on 14 September that the 1.5% stamp duty/ SDRT charge on issues and transfers of shares and securities integral to capital raising will formally be removed - this is relevant in particular to the listing of shares in UK companies through a depositary on non-UK exchanges and so could be seen as good news for using a UK topco on listing. This is an issue which you may have come across (particularly on US listings of UK companies) where, due to EU case law, HMRC stopped enforcing the 1.5% charge, but it remained in law. Read more.

Case law updates

  • FTT considers relief for amortisation of goodwill in Nellsar Ltd v HMRC
    These long-running appeals concern two aspects of the tax treatment of acquisitions of a number of residential care and nursing homes as going concerns. Most significantly, they concern the amounts to be recognised, capitalised and subsequently amortised for corporation tax purposes in respect of goodwill said to have been acquired as part of the transactions. In two cases, they also concern the apportionment of the purchase price for stamp duty land tax (“SDLT”) purposes between property and other assets (most materially, in the Appellant’s submission, goodwill).  Read the decision here.

HMRC Manual & guidance updates 
The following changes have recently been made by HMRC following review:

  • Company Taxation Manual
    • CTM00514: Introductory: meaning of ordinary share capital: how “ordinary” shares are distinguished. Updated 15 September for the Upper Tribunal decision in the Warshaw case. 
  • Corporate Finance Manual
    • CFM99030 - Interest restriction: administration: penalties: the three levels of inaccuracy and penalty for an incorrect return - updated 4 September.
  • Corporate Intangibles Research and Development Manual
    • CIRD220200: Patent Box: relevant IP profits: relevant IP income: head 2: licence fees and royalties - Updated 12 September to clarify wording
  • Double Taxation Relief Manual
    • DT11350PP List of countries: Korea has been renamed South Korea - information updated on 13 September
    • DT18850PP List of countries: the entries for Bophuthatswana, Ciskei, and Transkei (all in South Africa) have been removed. 
  • International Exchange of Information Manual
    • IEIM300033 - Country-by-Country reporting: Master and Local files ’Page archived on 14 September. To access the Country-by-Country reporting guidance please use this link.
    • IEIM700000 - guidance on the Mandatory Disclosure Rules legislation has been published. Updated 12 September
    • Updated 11 and 12 September - formatting and various links and URLs updated. See here.

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.


European Commission releases BEFIT, transfer pricing, and head office proposals
The European Commission published a new package of proposals on 12 September to put forward (i) a single set of tax rules for doing business in the EU (Council Directive on Business in Europe: Framework to Income Taxation (BEFIT)), (ii) harmonised transfer pricing rules within the EU ( Council Directive on Transfer Pricing) and (iii) a Head-Office Tax system for micro, small, and medium-sized enterprises (SMEs). BEFIT could be a simplification for business, but the introduction of so many new concepts and lack of alignment with the GloBE rules will need to be carefully handled, otherwise it may prove challenging to implement in tandem with other tax reforms. All three proposals require a unanimous vote of support from the EU Member States, and this must be achieved before the EU Commission term ends next Spring. Although it is too early to tell whether any or all of these proposals will ultimately be adopted, the TP proposal may find support with many Member States. Read more in our PwC tax policy alert.

Championing Europe's SMEs: Commission provides new relief to boost the competitiveness and resilience of SMEs
The European Commission has proposed new measures that are intended to provide short-term relief, boost SMEs' long-term competitiveness, and strengthen fairness in the business environment across the Single Market. As part of these measures, the Commission has also published new proposals for a Regulation on late payments in commercial transactions and a Directive establishing a Head Office Tax System for SMEs. Additional initiatives aim at further boosting SMEs' access to finance, improving the business environment and supporting SMEs' growth into mid-caps to unleash their full economic potential. Read more in this press release.

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 11 September includes: 1) EU Set To Publish BEFIT & Transfer-Pricing Directive Proposals; 2) CFE Professional Affairs Conference: ‘Tax Adviser 2030: Evolution or Revolution for Tax Practice, Policy and Administration?’; 3) G20 Statement Following the New Delhi Leaders’ Summit; 4) EU Parliament Tax Subcommittee Hearing on ‘FASTER’ Withholding Tax Proposal; and 5) African Leaders Propose Global Carbon Tax.Visit their latest news page here.


Pillars One and Two 

  • Pillar One Amount B: Reading the tea leaves
    In this TP Talks episode from 29 August, Kristina Novak (Principal in PwC’s US National Tax Practice), Kartikeya Singh (Principal in PwC’s US National Tax Practice), and Giorgia Maffini (Transfer Pricing and Tax Policy Director with PwC UK) discuss the OECD’s recent Public Consultation document on Amount B of Pillar One and the details of the progress made since the December 2022 consultation.
  • Amount B is back – what does it mean?
    In this Tax Bites episode published on 8 September, the speakers give an update on the current status and content of Amount B, what it means for businesses and next steps to consider, along with some crystal ball predictions on the likelihood and breadth of the impact.
  • Updated Pillar Two Country Tracker
    PwC's Pillar Two Country Tracker, our online tool, provides the status of Pillar Two implementation in different countries and regions. You can also find updates on recent Pillar Two developments in the territory updates below.

OECD Secretary-General tax report to G20 leaders 
This OECD report sets out the latest developments in international tax reform, including the Outcome Statement on the Two-Pillar Solution agreed upon by 138 members of the Inclusive Framework, OECD work on indirect tax, capacity building for developing countries, and major developments in tax transparency efforts, tax administration, tax and crime, tax policy and climate change.

Countries deploy tax policy to shield households and businesses from decade-high inflation 
Tax policy has played a central role as governments sought to shield households and businesses from the impact of decade-high inflation levels, according to a new OECD report. Read more in this OECD press release.


  • Papua New Guinea deposits its instrument for the ratification of MLI
    On 31 August 2023, Papua New Guinea deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) as well as the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
  • Romania completes its internal procedures for the entry into effect of the MLI
    On 5 September 2023, Romania confirmed the completion of its internal procedures for the entry into effect of the provisions of the Multilateral BEPS Convention (MLI) under Article 35(7)(b).

See this OECD item.

The text of the BEPS Convention, the explanatory statement, background information, database, and positions of each signatory and parties are available at

Other territories

Post-G20 geopolitics and the two-pillar project
In this episode in Policy on Demand series from 11 September, Craig Stronberg talks about the G20 meeting in New Delhi, its potential impact on business, and next steps for companies, including increased focus on the Global South and BRICS. Will Morris comments on the International Taxation section of the G20 Declaration.

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. In this edition, from 5 September, we note the passage of legislation in Uganda for a digital services tax (DST).

Digital tax megabyte for August 2023
This edition, to the end of August, includes: 1) the announcement about New Zealand DST legislation being prepared, in case needed from 1 January 2025; 2) changes to the French DST Guidance mainly in relation to ancillary services; 3) the India GST rules; 4) new VAT guidance from Egypt on digital services; 5) comment on an Indian case covering cloud services; 6) we flag progress in the IASB discussions on accounting changes for Pillar Two; and 7) highlights of some updates to our Pillar Two country tracker.

Environmental, Social and Governance (ESG)

  • Corporate Sustainability Reporting Directive
    The Corporate Sustainability Reporting Directive (CSRD) is the new EU directive that will take effect for large and listed companies, obligating them to share information on how they monitor a wide range of ESG issues and their impact on our planet. This marks a significant step change in reporting, with more companies impacted, more data required and more stakeholder scrutiny than ever before. Read more in our article.
  • Corporate Sustainability Reporting: Navigating complexities and driving change
    Corporate sustainability reporting is a rapidly evolving area of regulation that has seen a number of significant developments in recent months, including the UK Government’s updated Green Finance Strategy and finalisation of the first two International Sustainability Standards Board (ISSB) standards. In this blog, we look at some of the main themes and challenges we have seen across the market and in our conversations with clients as they prepare for new regulatory requirements.
  • Filling the Net Zero Leadership Gap: Why being an adaptive leader is crucial to net zero success
    What kind of leadership is needed to deliver net zero ambitions and close the gap between ambition and action? PwC UK’s new report, in collaboration with the Birmingham Leadership Institute, explores how adaptive leadership and systems thinking are key to delivering net zero transformation, and sets out practical recommendations on how to implement this in your organisation. Read the full report here.


See here for latest updates.

Amount B is back – what does it mean?
In this Tax Bites episode the speakers will give an update on the current status and content of Amount B, what it means for businesses, next steps to consider along with some crystal ball predictions on the likelihood and breadth of the impact.

New reporting rules for digital platform operators – Will they affect your business?
Bill C-47, which included the legislation to implement new reporting obligations for certain digital platform operators, received royal assent in June 2023. These new rules, which were initially announced in the 2022 federal budget, come into effect on 1 January 2024 and implement the due diligence procedures and reporting requirements of the OECD “Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy”. Affected platform operators should start preparing for these rules, given the scope of the new information collection, verification and reporting obligations, operators will need time to update their processes and systems to comply with these obligations. Read more in this PwC Tax Insights.

Poutine Routine: Canada’s Pillar Two, DSTs, with G(AA)Ravy on top 
In this Cross-border Tax Talks episode, Doug McHoney (PwC's International Tax Services Global Leader) and Ken Buttenham (who leads PwC Canada’s International Tax Practice from Toronto) kick off with a discussion on Doug’s favourite Canadian food, then dive into the Canadian Pillar Two proposals, discussing the Global Minimum Tax Act (GMTA), UTPR, IIR, QDMTT, compliance, the GloBE Information Return, and tax incentives. They also cover digital services taxes (DSTs), the excessive interest and financing expenses limitation (EIFEL) rules, and the Canadian General Anti-Avoidance Rule (GAAR).

Federal Cabinet approves government draft of the Growth Opportunities Act
At a recent closed-door meeting in Meseberg, the Federal Cabinet adopted the government draft for a law to enhance growth opportunities, investment, and innovation as well as tax simplification and tax fairness (Growth Opportunities Act). The government draft that has now been passed differs in parts from the draft bill as of 14 July 2023. Read more in this PwC blog.

Profit allocation of cross-border pipeline operations
In two decisions, the Düsseldorf Tax Court commented on the profit allocation regarding the operation of a transnational pipeline network between Germany, Belgium and the Netherlands through so-called pipeline operating sites which are permanent establishments from a tax point of view. Read more in this PwC blog.

Hong Kong
Consultation launched on patent box tax incentive 
On 1 September 2023, the Commerce and Economic Development Bureau published its much-anticipated consultation paper on the proposed patent box regime as Hong Kong pushes ahead on its goals of becoming an innovation and technology centre and a regional IP trading centre. This PwC news flash summarises the key parameters of the proposed patent box regime and our observations.


Ireland publishes roadmap for the introduction of a participation exemption to Irish CIT
The Minister for Finance, Michael McGrath T.D., has published a Roadmap for the Introduction of a Participation Exemption to Irish Corporation Tax, including a technical consultation until 13 December to inform ongoing design work. The roadmap sets out a timeline for the introduction of a participation exemption for dividends, and the next steps towards the planned introduction of a participation exemption for foreign branch profits in the autumn 2024 Finance Bill. See this press release.

PwC Pre-Budget Webcast
Join us for our annual Pre-Budget webcast on 19 September 2023 at 2pm, when we will consider the potential implications and opportunities of Budget 2024. This webcast will provide in-depth analysis of the upcoming Budget, focusing on key areas such as economic growth constraints, fiscal sustainability, infrastructure investment and sustainability initiatives. Register here.

Middle East
Saudi Arabia: Amendments to Zakat and Income Tax By-Laws 
The Minister of Finance has approved the amendments to Zakat and Income Tax By-laws which were published in the Official Gazette (Umm AlQura) 27/2/1445 AH on 12 September 2023 and became effective from that date. The amendments cover the deductibility of expenses for taxpayers, the procedures of the tax and Zakat litigation process, and the WHT rates on intercompany transactions among other amendments. The importance of these amendments arises from their extended impact on non-resident taxpayers in Saudi with respect to their income derived from a source in Saudi, particularly through related parties and branches of foreign companies. Read more in this PwC tax alert.

New box 3 mixes asset accumulation tax and capital gains tax 
The outgoing cabinet has designed a new box 3 system with the proposal 'Wet werkelijk rendement box 3’ ('Actual Return Box 3 Act'), which was published for consultation on 8 September 2023. As a main rule, the new box 3 system assumes taxation of actual returns according to a capital gains system. This system taxes realised and unrealised income from assets and allows related expenses to be deductible. Read more in this PwC news item.

South Africa
PwC Tax Synopsis - August 2023
The latest issue includes: 1) EU Carbon Border Adjustment Mechanism — what does this mean for my business? 2) The Commissioner’s discretionary powers: Can the Commissioner refuse to grant the new section 24(2A) lay-by allowance? 3) No escape hatch: business rescue pre and post commencement Debts; and 4) SARS Watch.

Government inquiry that may affect the Swedish tonnage tax regime
In 2016, Sweden introduced its tonnage tax regime, which has been available for fiscal years since 2017. Recently, the Swedish government appointed an inquiry to investigate and propose strategies to enhance the competitiveness of the country´s shipping industry and bolster its readiness for major crises. The inquiry´s assignment includes evaluating and proposing improvements to the Swedish tonnage tax regime. Read more in this PwC blog.

For the latest updates on current topics, see this PwC Switzerland Insights page.

Tax Update August 2023 
The latest edition covers: 1) Profit-seeking enterprises impacted by COVID-19 can be exempt from 2023 provisional income tax filing (not applicable to profit-seeking enterprises with 2023 fiscal year starting from 1 July 2023 onwards); 2) Ministry of Economic Affairs and Ministry of Finance announced sub-regulation under Article 10-2 of Statute for Industrial Innovation on 7 August 2023; and 3) Ministry of Economic Affairs announced sub-regulation under Article 10-2 of Statute for Industrial Innovation regarding industries eligible for “Forward-looking Innovative R&D” on 14 August 2023.

Notice 2023-64 provides interim CAMT guidance on key issues 
Treasury and the IRS have released Notice 2023-64, providing additional guidance on the application of the corporate alternative minimum tax (CAMT). The Inflation Reduction Act (IRA), enacted in 2022, imposes a 15% minimum tax based on the adjusted financial statement income (AFSI) of an ‘applicable corporation.’ The CAMT is effective for tax years beginning after 31 December 2022. Read more in this PwC Tax Insights.

IRS shifting compliance focus onto high-income earners, partnerships, and large corporations 
The IRS plans to leverage its Inflation Reduction Act funding to use improved technology, including artificial intelligence, in order to: 1) help exam teams better detect tax avoidance efforts, 2) identify emerging compliance threats, and 3) improve case selection tools to avoid burdening taxpayers with “no-change” audits. The agency also plans to target priority areas (such as digital assets, Report of Foreign Bank and Financial Accounts (FBAR) violations, and labour brokers) and improve audit and taxpayer protection in fiscal year 2024. The IRS’s renewed focus on high-income earners, partnerships, and large corporations has already led to increased audit activity for these categories of taxpayers and likely will continue to do so. Read more in this PwC Tax Insights

Treasury issues extensive proposed regulations with broad scope around digital asset information reporting
Treasury and the IRS recently issued lengthy proposed regulations regarding information reporting, determination of the amount realised and basis, and backup withholding for certain digital asset sales and exchanges. The regulations, if finalised as proposed, would impose obligations to file information returns and furnish payee statements on dispositions of digital assets based on companies engaging in a broad array of services or activities related to digital assets. Read more in this PwC Tax Insights.

IRS issues initial guidance on Section 174 amortisation 
The IRS and Treasury have issued Notice 2023-63, announcing their intention to issue proposed regulations addressing the changes made to the treatment of Section 174 specified research or experimental (SRE) expenditures by the 2017 tax reform act, effective for amounts paid or incurred in tax years beginning after 31 December 2021. Read more in this PwC Tax Insights.

Policy on Demand series 

  • More questions following 174 guidance
    The IRS's recently-issued notice covering Section 174 capitalisation and amortisation of R&D costs contemplates possible reinstatement of current expensing of these costs and provides directional guidance on a prospective basis. Watch here.
  • Post-G20 geopolitics and the two-pillar project
    In this episode from 11 September, Craig Stronberg talks about the G20 meeting in New Delhi, its potential impact on business, and next steps for companies, including increased focus on the Global South and BRICS. Will Morris comments on the International Taxation section of the G20 Declaration.
  • Congress returns with shutdown possibility on the table
    In this episode from 5 September, Chairman Dave Camp and Janice Mays share their insights on the busy, intense Congressional schedule for the fall with government funding, possible tax legislation, and discussions with the OECD.
  • Week in Review
    • 15 September - House Republicans remain divided over government funding, making a government shutdown increasingly more likely. In addition to the government funding debate, watch to see whether negotiations begin regarding R&D expensing, favourable interest deductibility, and bonus depreciation. Watch here.
    • 8 September - There are a number of moving pieces on the horizon as House Republicans continue their opposition to the current version of the OECD global minimum tax and Congress is running out of time to avert a government shutdown. And as for year-end tax legislation, stay focused on the Taiwan tax agreement as a possible legislative vehicle. Watch here.

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.

State and local tax

  • New Jersey issues guidance related to bright-line nexus and P.L. 86-272
    The New Jersey Division of Taxation has issued bulletin TB-108, which updates the state’s corporate business tax nexus guidance for privilege periods ending on or after 31 July 2023. Specifically, the new guidance incorporates bright-line economic nexus thresholds enacted this past summer (L. 2023, c. 96) and modifies the state’s application of P.L. 86-272 by listing additional activities that are deemed to exceed the Public Law’s protections and providing a nonexclusive list of protected activities. Read more in this PwC Tax Insights.
  • ALJ requires New York to exercise discretion to permit look-through broker-dealer sourcing for corporate tax purposes
    A New York administrative law judge (ALJ) recently directed the division to use its discretionary authority to adjust a taxpayer’s sourcing of receipts where the statutory formula was deemed to yield a distorted result. Read more in this PwC Tax Insights.
  • San Francisco Mayor Breed calls for tax reform to support post-pandemic economic recovery
    With a revised financial forecast projecting larger future shortfalls, San Francisco's Mayor Breed has called for tax reform to support economic recovery. 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.