Cross-border Tax Talks

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Mazhar Wani (PwC's FinTech Tax Leader) discuss PwC's Annual Global Crypto Tax Report and recent developments concerning digital assets. Doug and Mazhar discuss: what 'digital assets' are; the OECD's recent report, 'Taxing Virtual Currencies,' and how it compares with PwC's Annual Global Crypto Tax Report; the distinctions between cryptocurrencies and digital assets; the increase in guidance concerning digital assets and potential incentives for jurisdictions to lead in the digital asset space; how regulators around the world are treating the taxation of digital assets; the importance of classifying digital assets as 'property' or 'currency,' and distinctions between the two classifications; what 'staking' is and recent global trends regarding 'staking'; what 'decentralized finance' (DeFi) is and the future of DeFi; trends in the indirect tax space concerning digital assets; and recommendations for taxpayers looking to enter the digital asset space.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Aaron Junge (ITS Partner in PwC's Washington National Tax Services practice) discuss the recently-released final and proposed dividends received deduction (DRD) regulations under Section 245A. Doug and Aaron discuss: Aaron's background as Tax Counsel for the Committee on Ways and Means in the US House of Representatives and how this experience proves valuable in the private sector; the background and architecture of Section 245A; important topics included in the final and proposed DRD regulations including hybrid dividends, extraordinary dispositions (ED), and extraordinary reductions (ER); topics not fully contemplated in the final and proposed regulations, including certain mechanical rules of the DRD; how the ED rules interplay with the global intangible low-taxed income (GILTI) and Section 965 'toll charge' rules; notable changes from the 2019 temporary DRD regulations to the 2020 final DRD regulations, including changes to the treatment of sales of intellectual property (IP) and mitigating the circumstances in which the DRD rules produce double-taxation; what an ER is and how the final regulations clarify the year-end close election; and major takeaways from the proposed regulations, including coordination of the ED rules and application of the disqualified basis rules.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Chairman Dave Camp (Senior Policy Advisor in PwC's Washington National Tax Services practice and former Chairman of the House Committee on Ways and Means) discuss the past, present, and future of tax policy. Doug and Chairman Camp discuss: Chairman Camp's proposals for a global minimum tax during his tenure in Congress and how his proposals compare to the OECD's Base Erosion and Profit Shifting (BEPS) project; Vice President Biden's tax proposals, including amending the corporate tax rate, imposing a tax on book income, eliminating tax preferences for certain industries, and doubling the tax rate for global intangible low-taxed income (GILTI); the roles that the Senate, the US economy, and the global economy play in potential tax reform; President Trump's tax proposals; the evolution of the 'party platform,' political parties, and political factions; similarities and differences between the American political system and parliamentary systems; and the impact and utility of social media in the political sphere. [NOTE: This episode was recorded prior to the release of the "The Biden-Harris Plan to Fight for Workers" fact sheet released on September 9 by the Biden-Harris campaign.]

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Elizabeth Nelson (ITS Partner in PwC's Washington National Tax Services) discuss the recently-issued final and proposed high-tax exception regulations under the global intangible low-taxed income (GILTI) and subpart F income regimes. Doug and Elizabeth unpack: the background and history of the high-tax exception; the similarities and differences between the previously proposed high-tax exception regulations and the final high-tax exception regulations; how the regulations interact with net operating losses (NOLs) and the base erosion and anti-abuse tax (BEAT); what happened to QBUs, what is a 'tested unit,' and how the aggregation rules apply to tested units; the substance and implications of the 'consistency rule,' how the proposed regulations treat expense apportionment and negative interest rates; the new documentation requirements and anti-abuse rules contained in the regulations; and the continued importance of modeling due to the high-tax exception's interaction with many other TCJA provisions. Doug and Elizabeth also 'put a fork' in the notion that GILTI is a minimum tax and identify three categories of multinational taxpayers that may want to elect the high-tax exception.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Rebecca Lee (ITS Partner in Washington National Tax Services) discuss the recently-issued Section 163(j) final and proposed regulations. Doug and Rebecca discuss: what Section 163(j) is and how the Tax Cuts and Jobs Act changed the interest expense limitation rules for corporations; effective dates for both the final and proposed regulations; how the final regulations define 'interest;' the breadth of the anti-avoidance rule in the final regulations; how the final regulations define 'adjusted taxable income' and 'tentative taxable income;' how the final regulations treat the separate return limitation year (SRLY) limitation; and major takeaways of the proposed regulations, including how the proposed regulations treat controlled foreign corporations (CFCs), foreign persons with effectively-connected income (ECI), and partnerships.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Calum Dewar (a Partner in PwC's Washington National Tax Services (WNTS) ITS practice and leader of PwC's US Integrated Global Structuring practice) discuss the recently-issued Apple State Aid opinion from the General Court of the European Union. Doug and Calum discuss: what State Aid is; what the General Court's opinion says and how to interpret it; the procedure behind the European Commission's initial 2016 decision, including why Apple was not actually the defendant in the initial case, but why both the Irish government and Apple appealed the EC's decision to the General Court; the impact of US cost-sharing rules and transfer pricing methodologies on the General Court's decision; the role of 'selectivity' in State Aid; how the EC may act in this case, and in other State Aid cases, going forward; and what impact digital services taxes and the OECD's base erosion and profit shifting (BEPS) project may have on State Aid in the future.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Ninee Dewar (a Partner in PwC's Washington National Tax Services (WNTS) ITS practice) discuss the recently-released Foreign Derived Intangible Income (FDII) final regulations under Section 250. Doug and Ninee discuss: the background of the Section 250 deduction and how the deduction interplays with both FDII and Global Intangible Low-Taxed Income (GILTI); how the final regulations compare to the March 2019 proposed regulations under Section 250, including various changes to the documentation rules and loss transactions; Ninee's advice for taxpayers to meet the substantiation requirement; the background of the 'ordering rule' and how the rule helps coordinate Sections 250, 163(j), and 172(a); the importance of remembering that the Section 250 deduction is a taxable-income deduction (particularly in light of recent changes to the Net Operating Loss rules); how the final regulations treat electronically-supplied services and advertising services; how the final regulations treat related-party sales; and various important effective dates and applicability dates for the final and proposed regulations.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Pam Olson (PwC's US Deputy Tax Leader and Washington National Tax Services (WNTS) Practice Leader) discuss Pam's storied career as she retires from PwC. Doug and Pam talk: life as a tax practitioner in the 1980s; the value in working for the government; Pam's top achievements during her tenure at Treasury; major trends in US and global tax policy; the growth of trade, investment, supply chains, and globalization; the progressivity of the US tax system; the increase in partisanship over the past 40 years and the melding of 'campaigning' and 'governing' over that time; how we can focus on what we have in common rather than focusing on our differences; the recycling of tax proposals; and Pam's advice for both US and global policymakers.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Stephen Mosha (an ITS Partner and leader of PwC's Northeast Tax practice) have a candid conversation about Stephen's life as a Black tax professional. Doug and Stephen discuss: Stephen's experience as a Black partner at PwC; Stephen's thoughts on the homogeneity of the tax profession, how Stephen became interested in international tax; how tax professionals can help address racial inequities; and Stephen's advice for Black international tax professionals.

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Maarten Maaskant (an ITS Partner and ITS Desk Leader) discuss the EU's mandatory reporting rules (EU Council Directive 2018/822, also known as 'DAC6.') Doug and Maarten cover: the background of DAC6 and how it compares to the BEPS Action Item 12 concerning country-by-country reporting; when taxpayers will need to comply with the DAC6 reporting rules; how individual countries will need to implement DAC6; the differences between a 'taxpayer' and an 'intermediary' in the context of DAC6; the responsibilities of taxpayers and intermediaries; which transactions are considered 'reportable transactions'; potential penalties for not complying with the DAC6 reporting requirements; the potential downsides for reporting transactions that may not be considered 'reportable transactions' under DAC6; and final words of wisdom for both taxpayers and intermediaries.