Treasury recently issued Notice 2023-80 that lays the groundwork for future rulemaking, addressing the interaction between foreign tax credits and Pillar 2 rules.
The guidance touches on various aspects, such as top-up tax creditability, indirect foreign tax credits, and alterations to the non-duplication requirement. It also focuses primarily on the creditability of foreign taxes applying the GLOBE rules, including disallowing credits if U.S. income tax liability is involved. While questions remain regarding the application of the undertaxed payment rule (UTPR), Treasury plans to issue additional guidance.
In a recent Tax Notes article, "U.S. Income Analysis Complicates Pillar 2 FTC Credibility," A&M Tax Managing Director Brendan Sinnott provides key insights into the interaction between foreign tax credits and Pillar 2 rules, as well as potential implications for multinational enterprises and taxpayers.
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