Cross-border Tax Talks

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Phil Ramstetter, a Chicago-based International Tax Partner at PwC and Pillar Two subject matter specialist. Phil previously served as a tax policy consultant at Business at OECD (BIAC). Doug and Phil discuss the evolving Pillar Two landscape, including the OECD’s 2026 guidance, BIAC’s role in shaping workable rules, and the side-by-side and UPE safe harbors. They examine UTPR allocation and GIR validation problems arising from differences in domestic laws, alongside new guidance on explicitly conditional taxes and mismatched QDMTT fiscal years. The conversation also covers revised GIR and XML reporting, continuing QDMTT compliance for US-parented groups, upcoming guidance on related benefits and integrity measures, and why greater taxpayer input, prospective rulemaking, and filing standardization are essential to meaningful simplification.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Chris Desmond, leader of PwC US’s Global Trade Services practice and, as Doug puts it, a 'reformed Transfer Pricing Partner.' Doug and Chris, recording at PwC’s 2026 Global Transfer Pricing, Trade, and Indirect Taxes Conference in Chicago, discuss the progress of IEEPA tariff refunds and the related accounting, legal-entity, and transfer pricing decisions; continuing US tariff authority and trade tensions involving China, the European Union, Canada, and Mexico; and selective supply-chain reshoring. They also examine pharmaceutical tariff developments, White House deals, customs valuation and reconciliation, first-sale planning, and heightened audit exposure. The conversation closes with AI’s potential and limitations in trade compliance and three priorities for tax leaders: aligning customs and tax data, coordinating transfer pricing adjustments, and scenario planning.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Wade Sutton, International Tax Leader of PwC’s Washington National Tax Services practice and guest host of Cross-border Tax Talks. After Wade reflects on his previous experience at the US Treasury Department, he and Doug discuss four proposed regulation packages under the One Big Beautiful Bill Act (OB3): expense allocation for net CFC tested income (NCTI) and foreign-derived deduction-eligible income (FDDEI), FDDEI eligibility changes, CFC pro rata share rules, and repeal of the one-month deferral election. They examine foreign tax credit limitations, overall domestic loss exposure, M&A drafting and tax-year elections, and transition relief. The conversation also covers reconciliation prospects, regulatory comment periods, Loper Bright’s influence on Treasury’s approach, and anticipated guidance on foreign sales branches and foreign-controlled CFCs.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Laura Williams, an international tax partner in PwC’s Washington National Tax Services office and former branch chief in the IRS Office of Chief Counsel. Doug and Laura discuss the role of Treasury regulations, Section 7805(a), and the post-Loper Bright limits on agency deference and delegated authority. They explain why TCJA’s mismatched effective dates created a ‘donut hole’ and examine three recent regulation-validity decisions: Varian Medical Systems, Keysight Technologies, and Siemens Medical Solutions. These cases concern the Section 78 gross-up, GILTI deductions, extraordinary dispositions, and the Section 245A dividends-received deduction. The conversation also addresses judicial precedent, protective refund claims, return and financial-statement positions, possible government appeals, and the IRS’s potential use of economic substance and other alternative arguments when challenged regulations do not survive.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Laura Valestin, an international tax partner in PwC’s Washington National Tax Services office, who specializes in the taxation of financial transactions, including foreign currency. Doug and Laura discuss the proposed Section 987 regulations governing the new CFC election, beginning with the rule’s scope, history, and common QBU fact patterns. They explain how the election can turn off future Section 987 gain-or-loss computations, while preserving translation and basis-tracking requirements, and examine consistency across commonly controlled CFCs, partnership applications, inbound transactions, and the loss of future Section 987 losses. They also cover the 120-month amortization of pre-election amounts, the $50 million asset threshold, election timing and filing mechanics, reliance on the proposed rules, the November 12 comment deadline, and why detailed modeling is essential before making an effectively irrevocable choice.

Wade Sutton, PwC’s International Tax Leader for the Washington National Tax Services Office, fills in as host while Doug is away on assignment. Wade welcomes Will Morris, PwC’s global tax policy lead and former chair of the AmCham EU Tax Committee. In this episode, Wade and Will discuss the EU Foreign Subsidies Regulation (FSR). They cover its state-aid origins, reach into M&A and public procurement, and early enforcement record. The episode examines the European Commission’s recent assessment, possible reductions in reporting burdens, and the three-step analysis from foreign financial contribution (FFC) to subsidy to market distortion. The conversation also covers tax incentives and credits, Inflation Reduction Act and Pillar Two interactions, data-collection challenges, geopolitical considerations, standstill risks, and practical steps before an EU transaction or procurement bid.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Pat Coughlin, a Chicago-based tax director in PwC’s Quantitative Solutions and Technologies Practice within International Tax Services and a former Notre Dame running back. Doug and Pat discuss the June 30, 2026, Pillar Two compliance post-mortem, including PwC’s experience filing more than 50,000 returns with a success rate above 99%. They dive into how business rules and filing capabilities were built across dozens of jurisdictions, what late portals and conflicting validations revealed about the system, why the OECD and local tax authorities should act quickly on timely-filed GIR relief, a longer 2025 filing deadline, clearer amended-return mechanics, and broader simplification. They close with practical advice for 2025: start now, focus on calculations, and narrow review to the sections that matter most.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Shin Yamaguchi, a tax partner at PwC Japan, the Japanese inbound tax leader, and host of the English-language podcast Dial in Japan. Doug and Shin discuss Japan’s current inbound and outbound investment environment, the role of supply-chain diversification and energy security in Japanese outbound strategy, and why Japan remains an active market for inbound acquisitions and carve-outs. They also explore Japan’s Pillar Two implementation timeline, readiness for compliance, the interaction between Pillar Two and Japan’s CFC rules, practical administrative and substantive challenges for Japanese-parented groups, tariff-related uncertainty for US investment, and the tax controversy environment in Japan, including the continued focus on transfer pricing.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Paulson Tseng, PwC Taiwan’s International Tax Services and Transfer Pricing Leader, the firm’s Human Capital Leader, and host of the Finance and Tax Cafe podcast.

Doug and Paulson discuss Taiwan’s corporate tax framework, including the 20% corporate rate, foreign tax credit limits, withholding tax friction for services, and CFC rules; how inbound investment remains strong in semiconductors and R&D while outbound models are shifting toward more diversified, multi-nodal footprints; Taiwan’s current Pillar Two posture, top-up tax exposure, and readiness challenges around data, education, and compliance; whether Pillar Two is already changing business behavior; tax controversy themes in Taiwan, especially transfer pricing, withholding tax, and risk-based audits; and Paulson’s own podcast and its broader finance, economic, and workplace-stress topics.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Dr. Alexis Crow, partner and Chief Economist for PwC US. Prior to joining PwC, Alexis taught at the London School of Economics. Doug and Alexis discuss the macroeconomic and geopolitical implications of the Iran conflict, including energy-market scarring, oil-price scenarios, fiscal supports, inflation pressures, and central-bank constraints. They also examine the durability of US growth, AI-driven investment, consumer demand, and private credit risk; then move through global trade developments and regional dynamics across Asia-Pacific, Latin America, Europe, and North America. The conversation closes with the “re-industrial era,” energy addition, automation, workforce skills, and financial-stability risks that may be underappreciated.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Will Morris, PwC’s Global Tax Policy Leader, at PwC’s Asia-Pacific Global Tax Symposium in Hong Kong. Will previously chaired the Business and Industry Advisory Committee (BIAC) Tax Committee for 10 years. Doug and Will discuss the acute uncertainty surrounding Pillar Two filing readiness as initial 2024 calendar-year deadlines approach, including the OECD’s May 18, 2026, common understanding document, GIR central filing, local filing portals, XML schema differences, penalty relief, safe harbor elections, QDMTT and top-up tax returns, taxpayer outreach to BIAC, the OECD, and national governments, the OECD implementation toolkit, 52/53-week fiscal-year UTPR guidance, and unresolved dispute resolution questions.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Adriana Rodriguez, a PwC international tax partner based in Mexico City, for a discussion recorded at PwC’s International Tax Conference. Doug and Adriana discuss the core features of Mexico’s corporate tax system, including corporate income tax, withholding taxes, VAT, inflation adjustments, CFC rules, capital gains planning, and the impact of the multilateral instrument on treaty access. They also explore whether Mexico is likely to adopt Pillar Two, how Mexican multinationals are preparing for compliance, the role of incentives in inbound investment, the continued relevance of the maquila regime, rising audit and transfer pricing pressure, expanding tax authority digitization, and practical lessons for multinationals investing in Mexico.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Chris Desmond, leader of PwC’s US Global Trade Services practice and, as Doug notes, a ‘reformed transfer pricing partner.’ Doug and Chris discuss the current fragmented trade environment, why tariffs may remain a lasting feature rather than a short cycle, rising customs enforcement, the Supreme Court’s IEEPA decision and the operational complexity of securing refunds, and how companies should assess gross-versus-net refund exposure across suppliers and customers. They also cover why the tariff environment is forcing customs, tax, and transfer pricing teams to work more closely together, how first sale operates and why it remains under scrutiny, and practical steps tax leaders should take on coordination, data, and documentation.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Laura Valestin, an International Tax Services Partner in PwC’s Washington National Tax Services practice, where she focuses on financial transactions. In this episode, recorded at PwC’s International Tax Conference in Carlsbad, Laura unpacks the latest Section 987 developments following Notice 2026-17. Doug and Laura discuss what Section 987 is, why it matters for foreign currency gain or loss in branch and disregarded entity structures, the long regulatory history from the 1991 proposed regulations through the 2024 final rules, the new simplified equity-and-basis-pool method, remittance and loss-suspension mechanics, hedging rules, the proposed CFC election, reliance and applicability dates, and practical taxpayer action items, including comment opportunities and modeling decisions for 2025 and beyond.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Anja Manuel, co-founder and principal at Rice, Hadley, Gates, and Manuel LLC, a strategic consulting firm, and a former diplomat, author, and foreign policy advisor. Doug and Anja discuss the geopolitical forces reshaping cross-border business, including the Iran conflict and its implications for oil, shipping, Gulf investment, and AI infrastructure; China’s internal trajectory, tariffs, critical minerals, Taiwan, and supply-chain strategy; the growth outlook for Southeast Asia and India; Europe’s competitiveness challenges and the war in Ukraine; Venezuela’s political and investment risks; the effect of possible US midterm shifts on foreign policy; and whether international institutions, alliances, and the broader global economy still offer reasons for optimism despite a highly unstable backdrop.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Steve Kohart, a New York City-based international tax partner at PwC and former advisor to the OECD’s Center for Tax Policy and Administration. Doug and Steve discuss the January side-by-side agreement’s implications for US-parented multinationals, why Pillar Two remains relevant through QDMTTs, and how the CBCR transitional safe harbor bridges to the permanent simplified ETR safe harbor. They unpack what ‘simplified’ really means: financial accounting standards, denominator and numerator adjustments, deferred tax ‘bad DTLs,’ and the practical reality of a third set of books. The conversation also covers JV complications, Chapter 6 M&A/reorg rules, transition provisions (9.1.1–9.1.3) and excess negative taxes, new flexibility for return-to-provision adjustments, integrity rules, and what guidance and compliance planning teams should prioritize next.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Wade Sutton, a PwC principal who leads the International Tax Team in PwC’s Washington National Tax Services Practice and previously served as Deputy International Tax Counsel at the US Department of the Treasury. Doug and Wade discuss late-2025 Treasury and IRS guidance implementing cross-border provisions in the One Big Beautiful Bill Act (OBBBA), focusing on transition and compliance mechanics that surface on 2025 returns. They walk through Notice 2025-72 (CFC year-end conformity and short-period foreign tax allocation), Notice 2025-75 (final-year coordination of the 'hot potato' rule with Section 951A(2)(B) as the regime shifts to pro rata attribution), Notice 2025-77 (a 10% foreign tax credit haircut for taxes tied to certain previously taxed distributions), and Notice 2025-78 (limits on deduction-eligible export income for certain property and IP sales). They close with downstream interactions (especially CAMT and loss/FTC limitations) and how Pillar Two 'side-by-side' dynamics may influence structuring.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Nils Cousin, an international tax partner in PwC’s Washington National Tax Services Practice, for his fourth appearance on the show. Doug and Nils discuss Nils’s April 2024 Jeopardy experience before pivoting to the 1916-era Section 892 exemption: how foreign governments, sovereign wealth funds, and public pension funds use it, and how ‘commercial activity’ and ‘controlled commercial entity’ rules can taint the benefit. They unpack the December 2025 regulation package, highlighting what was finalized (including an inadvertent-activity cure period, the qualified partnership exception, and FIRPTA taint relief) and what remains proposed, especially a framework that presumptively treats many debt acquisitions and workouts as commercial activity. The episode closes with the regulation process, effective-date mechanics, and a January 18 Treasury Secretary tweet, leaving us wondering whether market feedback might drive revisions.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Craig Stronberg, Senior Director on PwC’s Intelligence Team. Craig leads analysts focused on macroeconomic and geopolitical intelligence; he previously served in the Office of the Director of National Intelligence. Doug and Craig discuss why business and tax leaders should focus on the geopolitical landscape to understand its impact on cross-border business, including tax. Stability is the new bar for many businesses in 2026, requiring greater agility to deal with change. Craig discusses how many businesses are in a 'wait‑and‑see' mode versus decisive movers across industries. He also describes areas of focus, such as the US policy stance for the Americas, Greenland, and tariffs; the Global South’s rising coordination; and governance strains across the G20. While AI data falsification is a significant concern, Craig suggests practical actions for boards such as enabling direct access to the business’ risk team.

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Pat Brown, an International Tax Partner in PwC’s Washington National Tax Services practice and Co-leader of the National Tax Office. Pat previously served as GE’s VP of Tax and Director of Tax Policy. Doug and Pat discuss highlights from 2025: the US day-one Pillar Two executive order and the OECD’s late-year side-by-side package; Section 899; the shifting of DSTs into the trade lane; and the expanding role of the UN for global tax policy. On US policy, they also unpack how OBBBA yielded greater stability; CAMT corrections; stock buyback excise tax guidance; and long-awaited Section 987 rules. Looking ahead to 2026, they assess the potential for additional US tax legislation under reconciliation, as well as the future of Pillar Two, its complexity, and how QDMTTs are now the backbone of Pillar Two.