Two weeks to 30 June 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
- Finance (No. 2) Bill and Pillar Two impact on financial statements
On 20 June 2023, Finance (No. 2) Bill 2023 completed its third reading in the House of Commons and became substantively enacted for UK GAAP and IFRS purposes. Royal Assent is expected to take place in mid-July (see more below). For US GAAP, the measures will be considered enacted when the Bill receives Royal Assent. For financial reporting purposes under IFRS and UK GAAP, taxation balances are only adjusted for a change in tax law if the change has been substantively enacted by the balance sheet date. In this In brief we draw your attention to the tax and disclosure considerations in relation to the domestic and multinational top-up taxes implemented by the Bill. - Pillar Two - what do general counsels and legal teams need to know?
The complexity and uncertainty of the new regime compounds the existing global compliance and regulatory challenges for MNEs, as this new calculation requires taxpayers to establish an entirely new set of books to do the calculations. Whilst a lot of work is being undertaken globally to form a data strategy and on operational readiness, there are many ways in which legal teams can support and work alongside other teams to facilitate the implementation of these rules. This article sets out information that GCs and legal teams need to know about the impact of Pillar Two reforms on large Multinational Enterprise Groups. - HMRC launches Pillar Two nudge campaign
HMRC has made us aware of a communications campaign it now has underway. This involves a Pillar Two educational nudge letter concerning UK adoption of Organisation for Economic Cooperation and Development (OECD) Pillar Two model rules. See more on the CIOT website here. - PwC’s Pillar Two Engine - are you Pillar Two ready?
PwC’s Pillar Two Engine is both a compliance and reporting solution. It’s a structured model and is flexible to allow for various data structures/sources. It also prioritises the key adjustments/elections. The modelling provides compliance and provision grade calculations as well as data visualisation to identify key territories where there is a risk of an OECD Pillar Two tax charge. The engine utilises a centralised database with a vetted calculation engine in consultation with PwC Global technical and policy leaders. The database is dynamically updated for rule changes and new legislation in each jurisdiction which is a key differentiator to a spreadsheet based approach. Let us help you get Pillar Two ready. - Webcast: A practical guide to surviving Pillar Two
Our latest Pillar Two webcast was held on Thursday 22 June, in which Matt Ryan was joined by Rob Gooding (TRS Partner) and Jos Bhasker (Tax Technology SM) and provided an update on Pillar Two implementation globally, and proposed some practical steps organisations can take to overcome some of the key challenges they are facing. They also walked through the technology solutions being developed for compliance and reporting. - Updated Pillar Two Country Tracker
We’ve updated our Pillar 2 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.
Finance (No 2) Bill 2023 - status
The Bill completed its third reading in the House of Commons on 20 June, becoming substantively enacted for UK GAAP and IFRS purposes. Royal Assent is expected to take place in mid-July (after the completion of the Lords stages, scheduled for 4 July, and before summer recess on 21 July). Keep up with the timetable for this Bill here.
Case law update
- Upper Tribunal overturns FTT decision in GE Financial Investments case - stapled stock a ‘criterion of a similar nature’ satisfying treaty residence test
The Upper Tribunal (UT) has overturned the First tier Tribunal decision on the question of treaty residence, finding that a stapling arrangement constitutes a ‘criterion of similar nature’ for the purpose of the test in Article 4 of the US/UK double tax treaty. The UT therefore allowed GEFI’s appeal in this case, finding that it was resident in the US for treaty purposes during the relevant period and therefore entitled to double tax relief totaling approximately £125million. In relation to whether GEFI was carrying on a business in the US (known as Issue 2(A)), the UT found that any errors made by the FTT were not material, and therefore it did not interfere with the FTT decision on that matter. However, given the UT decision on residence, Issue 2(A) did not impact GEFI’s entitlement to relief under the treaty. You can see the full judgment here. - Oil production related payments were not liable to UK taxation
In Royal Bank of Canada v R & C Commrs [2023] BTC 19, the Court of Appeal overturned the decision of the Upper Tribunal in Royal Bank of Canada v R & C Commrs [2022] BTC 505. The Court of Appeal concluded that payments received by the Royal Bank of Canada were not subject to taxation in the UK by reason of Article 6 (Income from immovable property) of the UK/Canada double tax treaty, and allowed the taxpayers’ appeal against taxation on such payments. There’s a lot in this decision to interest the international tax specialist, not least the extensive analysis of the correct way to interpret a treaty and how to deal with the French text of the treaty in an English Court. See here for a link to judgment.
HMRC Manual & guidance updates
The following changes have recently been made by HMRC following review:
- Corporate Interest Restriction (CIR)
A number of minor changes have been made to HMRC’s Corporate Finance Manual, most significantly:
Speak to your usual PwC contact, or to Iain Mcdonald or John Webb from our Finance & Treasury team, if you would like to discuss what this means for you.
Appointment of reporting company for CIR purposes
HMRC has recently issued updated guidance regarding the circumstances in which it will be willing to appoint a nominated reporting company for CIR purposes. We’ve seen a lot of examples recently where we’ve asked HMRC to exercise their power to appoint when the nomination deadline has not been met. As a result of this new guidance, it is less likely that such requests will be successful, especially where there is no disallowed amount and the group is seeking to access unused interest allowance from prior periods. It’s therefore even more important than ever to ensure that a nominated reporting company is appointed within the statutory nomination deadline. Speak to your usual PwC contact, or to Iain Mcdonald or John Webb from our Finance & Treasury team, if you need help ensuring this is done.
CIOT consultation responses
- Taxation of decentralised finance involving cryptoassets
The Chartered Institute of Taxation (CIOT) has responded to the HMRC consultation on the taxation of decentralised finance involving the lending and staking of cryptoassets. You can read their submission here. - Stamp Taxes on Shares modernisation
The Chartered Institute of Taxation (CIOT) has responded to the HMRC consultation on Stamp Taxes on Shares modernisation. You can read their submission here.
Talking Tax, June 2023
Welcome to this month's Talking Tax, bringing you a range of views and insights from specialists across our business. The latest edition includes: 1) Refining and rationalising your tax processes; 2) Connected tax compliance: Making the right tech investments; 3) The build or buy dilemma: What’s a tax leader to do?; and 4) A surprising ROI-booster: Your tax team.
EU
European Commission FASTER Directive would harmonise withholding tax procedures in the EU
The European Commission has published the draft Faster and Safer Relief of Excess Withholding Taxes (FASTER) Directive to encourage investment in the Single Market by making withholding tax procedures in the EU more efficient and secure for investors, financial intermediaries and Member State tax administrations. FASTER responds to calls for standardised withholding tax procedures and is estimated to save investors around €5.17 billion per year. The proposal, while promoting ‘faster’ is also promoting ‘safer,’ so includes anti-avoidance provisions, as well as new obligations for both financial institutions and tax administrations. Once adopted by EU Member States, the proposal is expected to come into force on 1 January 2027. Read more in our PwC Tax Policy alert.
EU’s Foreign Subsidies Regulation: State Aid goes global
In this Cross-border Tax Talks episode from 22 June, Doug McHoney is at PwC’s Global Financial Services Tax Leaders Meeting in Paris where he is joined by Will Morris, recently named PwC’s Global Tax Policy Leader to discuss the European Union’s Foreign Subsidies Regulation (FSR). To find out more, register here for our webcast on Wednesday 12 July at 4pm where our panel will explore, among other topics, the range of subsidies and incentives within scope, data collection issues/requirements, and how the FSR might impact deals.
Spain’s priorities for its presidency of the EU Council
The Spanish presidency of the EU Council, which begins in July, will try to get member states to agree on proposals to strengthen the EU list of noncooperative jurisdictions for tax purposes. It will also work to establish common minimum corporate tax standards and fight tax evasion by large multinationals, according to the Spanish presidency's priorities program.
ECJ: Partial trade tax addback of portfolio dividends in 2001 upon exercise of block option
The trade tax addback of foreign portfolio dividends in the year 2001 is in line with the EU provision on the free movement of capital in Article 63 TFEU (formerly: Article 56 TEC). This was decided recently by the European Court of Justice in an answer to a preliminary request submitted by the Supreme Tax Court. Read more in this PwC blog.
Tax subcommittee MEPs conclude visit to London
Three Members of the European Parliament Subcommittee on tax matters recently completed a visit to London where they discussed tax with British stakeholders and counterparts. During the two-day mission, the delegation met key political decision-makers and stakeholders to discuss developments in the area of international taxation and the relation between the EU and the UK in this field. Read more in this European Parliament press release.
EU-New Zealand: Council adopts the decision to sign free trade agreement
On 27 June, the Council adopted a decision on the signature of the free trade agreement (FTA) with New Zealand. The European Union subsequently concluded negotiations for a comprehensive and ambitious trade agreement with New Zealand on 30 June 2022. After the signing takes place, the Council will request the European Parliament to give its consent to the conclusion of the Agreement (as stipulated in the TFEU). Once the European Parliament has given its consent, the agreement has been ratified by New Zealand, and the two sides notify each other about the completion of their internal procedures, it can then enter into force. Read more in this EC 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 19 June includes: 1) European Commission Publishes ‘FASTER’ Proposal – New Rules for Withholding Taxes in the EU; 2) EU Parliament Adopts Report on Lessons Learned from the Pandora Papers; 3) ECOFIN Progresses Debate on ViDA Proposals; 4) Now: “A Gender Equal Tax System in Europe: Reflections for a New Agenda” – 4 July 2023, EU Parliament; and 5) European Parliament Subcommittee on Tax Matters – Hearing on the Role of Tax Incentives on EU Policy Goals – 27 June. Visit their latest news page here.
OECD
Pillar Two
See our UK section above for updates on the UK implementation of Pillar Two and our international section below for updates regarding the steps other territories are taking in relation to Pillar Two.
- Pillar Two In the loop & In depth: Time to act and what it means for you now
The Pillar Two global minimum tax is here. Japan and South Korea have enacted domestic Pillar Two legislation, and many other countries have released draft legislation or publicly announced their plans to introduce legislation based on the OECD Model Rules. Many aspects of Pillar Two will be effective for tax years beginning in January 2024. Given the anticipated impact on interim and annual financial reporting in calendar year 2024, as well as future impacts on cash taxes and compliance requirements, companies are encouraged to act now. We’ve recently published PwC In the loop and PwC In depth which explain what the Global taxation means for companies now and what action needs to be taken. - 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.
Continued progress on countering harmful tax practices as jurisdictions bring their preferential regimes in line with international standards
Jurisdictions are continuing to make progress on implementing the international standard under BEPS Action 5 to address harmful tax practices, as the OECD/G20 Inclusive Framework on BEPS releases new results on preferential tax regimes. See this OECD item.
MLI
- OECD launches new version of the BEPS Multilateral Convention Matching Database to further support international tax co-operation
A new and improved version of the database supporting the application of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "BEPS MLI") has been released and will allow tax authorities and other interested parties to make projections on how the MLI modifies a specific tax treaty. Read more in 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 https://oe.cd/mli.
Other territories
International Tax News - Edition 120, June 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) Switzerland voters approve Pillar Two; 2) Norway proposes Pillar Two legislation; 3) Key administrative notifications with respect to investments by non-residents in privately held Indian companies; and 4) Costa Rica Executive Branch introduces corporate tax bill.
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 June, includes: 1) access to a new African indirect tax guide with useful information across 43 countries including tax measures directed at the digital economy; 2) a special report by the New Zealand revenue authorities on the VAT/GST full liability model for platforms; 3) we also note that Israel has dropped VAT plans for B2C digital services; 4) Jersey has published overseas retailers' GST guidance notes; 5) France has published a revised doctrine/guidance on its Digital Services Tax; 6) Hungary has proposed changes to its Payment Services Tax; 7) Canada has passed its law on digital platform reporting; 8) there are relevant state tax updates for Maryland and Georgia; 9) the IASB has also issued an Exposure Draft on deferred tax accounting for Pillar Two by SMEs; and 10) Kenya's President has approved the Finance Bill containing the new Digital Asset Tax.
Environmental, Social and Governance (ESG)
- Retain, retrain, transform - Is the answer to the skills crisis staring businesses in the face?
Organisations face a time of huge transformation. Social or the ‘S’ elements of ESG are rising in prominence, with issues such as fairness, culture, relationships and inclusivity becoming a greater focus for business leaders. In our 2023 Hopes and Fears survey we delve into the attitudes of the workforce and employers when it comes to technology, transformation and skills. Green skills was considered a future ‘premium’ skill, with 37% of the workforce indicating their employer will have opportunities for them to develop in this area. Read here to find out more. - Wake up and smell the CSRD
The Corporate Sustainability Reporting Directive (CSRD) is now law in the EU and will affect tens of thousands of companies within and outside the bloc, including many in the UK. The EU’s goal is that the CSRD stimulates a mass shift in corporate behaviour - a shift that ultimately and rapidly delivers not only a net zero economy, but a truly sustainable economy that operates within global ecological boundaries that is fair for society. Read our article to learn more.
TP Talks Podcast: Financial Transactions Transfer Pricing
This TP Talks Special Edition podcast, David Ledure (Transfer Pricing Partner, PwC Belgium), Martin Cazaux (Transfer Pricing Principal, PwC US), and Tony Koivula (Transfer Pricing Manager, PwC Finland) discuss debt capacity and transfer pricing, focusing on the US’s and EU’s history of looking at debt capacity, the varying approaches to analysing debt capacity, Australia’s draft legislation on proposed new interest limitation rules, debt serviceability, and reassessment of debt capacity and double taxation.
Australia
Updated draft law on proposed intangibles integrity measure
The Australian Treasury has released updated draft law and explanatory materials which significantly amends the scope of the Federal Government’s proposal to deny deductions for payments relating to intangible assets connected with low corporate tax jurisdictions.
Legislation for multinational tax measures introduced into Parliament
On 22 June 2023, legislation to implement new tax measures for multinational enterprises (MNEs) was introduced into Federal Parliament. These measures, which will apply as early as 1 July 2023, make significant changes to Australia’s thin capitalisation regime, and introduce new tax transparency obligations for public companies.
Guidance on corporate residency test
The Australian Taxation Office has published an updated version of this guideline as a draft for public comment until 28 July 2023. The proposed changes to PCG 2018/9 are to add the Appendix - Risk assessment framework to assist foreign-incorporated companies in managing their compliance risks for the central management and control test of residency and provide certainty regarding the ATO’s compliance approach.
Belgium
See here for latest updates.
New tax treaty signed between Belgium and the Netherlands
A new tax treaty was signed between Belgium and the Netherlands. This new treaty is now published and will go through the normal ratification process. The treaty includes a number of important changes for all taxpayers with cross border activities between Belgium and the Netherlands. According to the press release of the Minister of Finance, this new treaty with the Netherlands aims to bring more clarity, fairness and legal certainty. Read more in this PwC news item.
Canada
Mandatory disclosure rules ─ taxpayers, advisers and promoters need to prepare
As previously reported, in April 2023 the federal government tabled Bill C‑471, which includes the legislation to implement revised and expanded disclosure rules relating to tax avoidance transactions and uncertain tax treatments, commonly referred to as the mandatory disclosure rules (MDR). On 22 June 2023, Bill C-47, which includes the legislation to implement the enhanced mandatory disclosure rules (MDR), received royal assent. The royal assent version of this legislation is identical to the MDR legislation that was tabled on 20 April 2023. Read more in this PwC Tax Insights.
France
France publishes revised doctrine/guidance on DST
France has published a revised doctrine/guidance on certain aspects of its Digital Services Tax. See the 28 June edition of our Digital tax byte for a summary.
Germany
No extended trade tax deduction for general partner without share in partnership assets
The participation of a limited liability company (GmbH) as general partner in a limited (non-trading) real estate managing partnership (KG) does not entitle the GmbH to an extended deduction of the part of income from the administration and use of own real estate within the meaning of Sec. 9 No. 1 2nd Sentence Trade Tax Act if the GmbH does not have a share in the assets of the KG. The Supreme Tax Court held that the general partner GmbH uses and manages third-party property rather than managing own real estate as presupposed by the statutes. Read more in this PwC blog.
India
Supply of drawings and design by a Swiss entity cannot be taxed in India as FTS
The Delhi bench of the Income-tax Appellate Tribunal has held that supply of drawings and designs by the appellant, which is inextricably linked to offshore sale and supply of plant and equipment, cannot be taxed as fees for technical services (FTS) in India. The Tribunal observed that offshore supply of plant and equipment was held as non-taxable in India by the Commissioner of Income-tax (Appeals), against which the Tax Officer has not filed an appeal. Therefore, supply of drawings and designs cannot be considered on a standalone basis, as the buyer could not have utilised such drawings and designs without supply of plant and equipment. Accordingly, the Tribunal held that consideration received by the appellant on account of supply of drawings and design would not be taxable in India as FTS. Read more in this PwC Tax Insights.
Ireland
Ireland publishes consultation on taxation of funds sector
The Minister for Finance Michael McGrath TD has published a public consultation document as part of a review of Ireland’s funds sector entitled, “Funds Sector 2030: A Framework for Open, Resilient & Developing Markets”. The public consultation period will run until 15 September 2023. Ireland is seeking public input on a review of its asset management and funds sector, which includes recommendations on the taxation of investment products.
Italy
Interactions between the beneficial owner, the abuse of law and the Parent-Subsidiary Directive
The Supreme Court, in its judgment no. 16173/2023 published on 8 June 2023, provided important clarifications on the interactions between the notion of beneficial owner and the abuse of law with respect to the dividend exemption regime set out in the Parent-Subsidiary Directive. Read more in this PwC blog.
Malaysia
Malaysia introduces new transfer pricing and APA rules
Malaysia has introduced new Income Tax (Transfer Pricing) Rules 2023 and Income Tax (Advance Pricing Arrangement) Rules 2023 which were gazetted on 29 May. The TP Rules 2023 will apply to years of assessment 2023 onward and make significant changes to Malaysian transfer pricing regulations, principally increasing the level of documentation requirements, particularly for Multinational Enterprise (MNE) groups, providing prescriptive guidance on the arm’s-length range, and tightening compliance requirements in relation to transfer pricing documentation deadlines. The Income Tax (Advance Pricing Arrangement) Rules 2023 supersede the Income Tax (Advance Pricing Arrangement) Rules 2012 with immediate effect, and primarily prescribe additional documentation requirements for pre-filing meeting requests and restrict the category of APAs that can be applied for transactions involving counterparties in tax jurisdictions with which Malaysia has a double tax agreement. Read more in this PwC Tax Insights.
Netherlands
Court: acquisition interest not deductible due to the evasion of law doctrine
Within the Dutch Corporate Income Tax Act the basic principle is that taxpayers have freedom of choice in the method of financing a company in which they participate. Statutory deduction restrictions that violate this must, according to the Supreme Court, be interpreted in a limited way. In a case in which the Supreme Court had previously considered that the interest deduction limitation of Article 10a Wet Vpb 1969 (anti-base erosion rule) does not apply due to a successful appeal to the counter-evidence rule, the Amsterdam Court of Appeal had to investigate whether there were other grounds on which the interest could be limited in deduction. In this referred judgement, the court ruled that the interest deduction on a shareholder loan should still be refused, namely on the basis of the doctrine of fraus legis (evasion of the law). Read more in this PwC news item.
New tax treaty signed between Belgium and the Netherlands
A new tax treaty was signed between Belgium and the Netherlands. This new treaty is now published and will go through the normal ratification process. The treaty includes a number of important changes for all taxpayers with cross border activities between Belgium and the Netherlands. According to the press release of the Minister of Finance, this new treaty with the Netherlands aims to bring more clarity, fairness and legal certainty. Read more in this PwC news item.
New Zealand
EU-New Zealand: Council adopts the decision to sign free trade agreement
On 27 June, the Council adopted a decision on the signature of the free trade agreement (FTA) with New Zealand and the European Union subsequently concluded negotiations for a comprehensive and ambitious trade agreement with New Zealand on 30 June 2022. After the signing takes place, the Council will request the European Parliament to give its consent to the conclusion of the Agreement (as stipulated in the TFEU). Once the European Parliament has given its consent, the agreement has been ratified by New Zealand, and the two sides notify each other about the completion of their internal procedures, it can then enter into force. Read more in this EC press release.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
Global minimum tax in Switzerland – the Swiss voters clearly say yes
With a majority of roughly 78%, Swiss voters approved the new constitutional provision on the implementation of the OECD/G20 project on the taxation of large corporate groups (BEPS 2.0 project) in the public vote on 18 June 2023. This positive outcome enables Switzerland to continue with the work on the global minimum tax implementation plan. Read more in this PwC Tax Insights.
US
Regulations address direct payment of advanced manufacturing tax credit
The CHIPS Act of 2022 enacted Section 48D, the advanced manufacturing investment credit of 25% of qualified investment in a facility that manufactures semiconductors or the equipment to manufacture semiconductors. The IRS and Treasury recently released proposed regulations addressing direct payment of the Section 48D credit and temporary regulations requiring taxpayers to register to elect direct payments. Comments on the proposed regulations are due by 14 August 2023. A public hearing is scheduled for 24 August 2023. Read more in this PwC Tax Insights.
IRS delays filing and payment obligations for excise tax on stock repurchases
The IRS has issued Announcement 2023-18, which provides transitional relief to taxpayers regarding the due dates for their filing and payment obligations related to the excise tax on repurchases of corporate stock under Section 4501 (the Excise Tax), which was enacted as part of the Inflation Reduction Act of 2022 (the IRA). Read more in this PwC Tax Insights.
Policy on Demand series
- Signs of bipartisanship amid tax policy negotiations
The Republican economic growth package passed by the Ways and Means Committee opens the door for negotiations with Democrats later this year while the US-Taiwan agreement appears to have strong bipartisan support. Watch here. - Week in Review
23 June - In this episode, Pat Brown provides insights on recent international tax developments, including Joint Committee on Taxation estimates showing a negative revenue impact of implementing Pillar Two. As we expect upcoming guidance from the OECD around its two-pillar initiative, companies should focus on Congressional response to the JCT estimates.
Tax Readiness webcast series
- 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. Register here to join our panel of specialists on Wednesday 19 July at 8pm, as they 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.
Tax Readiness: Q2 Financial reporting considerations
On Thursday 22 June, our panel of PwC specialists, took a deep dive into key tax accounting and reporting reminders, along with recent tax developments. Watch the replay here.
State and local tax
- South Dakota v Wayfair — five years later
This PwC Insights article (which originally appeared in The Tax Adviser) provides an overview of the expected and unexpected tax impacts of the Wayfair ruling, as well as the operational implications for taxpayers. From states applying Wayfair to other types of taxes, to potential sales tax overpayments as a result of vendors operating in new jurisdictions, this column walks through what taxpayers are experiencing five years later and how the changing landscape may impact businesses going forward. - Connecticut makes PTET elective & enacts other changes
Recent legislation enacted in Connecticut amends the pass-through entity tax (PTET), most significantly, from 2024 it will be optional rather than mandatory. While most states have enacted PTETs in response to the federal limitation on the itemised deduction for state taxes paid, Connecticut was the only state to make the tax mandatory. The legislation also extends the 10% corporation business tax surcharge for three additional years to the 2023, 2024, and 2025 income years and decreases the lowest two marginal personal income tax rates from (1) 3% to 2% and (2) 5% to 4.5%. Read more in this PwC Tax Insights. - Illinois enacts changes to qualifying investment partnerships
Enacted on 7 June, S.B. 1963 makes several changes that affect investment partnerships. Like several other states, Illinois provides favourable tax treatment to qualifying investment partnerships (QIP). For example, an entity that qualifies as a QIP is not subject to replacement tax. S.B. 1963 amends the definitions of “investment partnership” and “qualifying investment securities’’ and expands two qualifying tests. The 90% asset test now includes partnerships as a qualifying security, and the 90% income test now includes partnership income from lower-tier partnership interests as qualifying income. The legislation also now requires QIPs to report and withhold Illinois-sourced income on nonresidents. These changes are effective for tax years ending on or after 31 December 2023. 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.