Thread by @SoongJohnston

.@johnpkiwi kicks off day 2 of #OECDTaxConference with “facts that may not be true” about his pillar 2 panelists @rebeccakysar Isaac Wood, Martin Kreienbaum, Barbara Angus, Ryan Bowen, Louise Weingrod

Favorite fun fact: Kreienbaum’s brother is an asparagus farmer

Not so fun fact: Harris Horowitz of BlackRock has COVID

A reminder of how the pillar 2 GLOBE rules work (in case you forgot)

.@johnpkiwi takes us on a “cantor” of the GLOBE rules’ operation and the main parts of the implementation framework

Kreienbaum: It's pretty clear Germany would make use of the option in the EU directive for a QDMTT. It's funny we spent so much time on the IIR and UTPR, but I think all countries will go for a QDMTT. #OECDTaxConference

Kreienbaum: I'm confident we'll get the EU directive on pillar 2 passed. Also, he reiterates that an unreformed GILTI regime would be considered a CFC regime. Reformed GILTI would be a qualified IIR (he'd said this at an IFA Liechtenstein event) taxnotes.com/tax-notes-toda…

Germany's finance ministry plans on asking the legislature to abolish article 49 of the IT Act which imposes extraterritorial taxes on IP transactions, per Kreienbaum. There's a political connection betweethis and pillar 2 implementation he says

On EU pillar 2 directive: What we’re seeing is the non-tax related objectives of a single country that will be resolved in time. Pillar 2 implementation is no longer a matter of it but a matter of when, says @rebeccakysar

Interesting updates from Isaac Wood of @USTreasury who is involved in Working Party 11, the team charged with P2 design: They're considering a tracing approach and a simplified mechanical allocation approach to allocation CFC taxes under the GLOBE rules

Designing a P2 safe harbor with maximum simplification is a top priority for the second half of this year, the working party is exploring a transitional safe harbor concept, which the US definitely supports, says Wood

Angus raises many practical administrative P2 concerns, says that financial accounting standards are dynamic, "which i think is not something I've ever said before" drawing chuckles from the audience Raises a good point, what happens when FIRS or GAAP change?

Takeaways: how can the determinations about the P2 implementation framework be made to be binding on countries? How can complexity be reduced? says Angus. #OECDTaxConference

We did the best we can to try avoiding disputes through the ordering rules but there is potential for differences to arise that could give rise to double taxation; we're already thinking about the need for dispute resolution mechanisms to address those concerns: @johnpkiwi

One aspect of P2 rules is the political: now so much how the rules will apply to a client’s situation but how a country will apply them, that creates uncertainty that I’m not accustomed to as a tax advisor says Ryan Bowen of @DeloitteTax #OECDTaxConference

Good tax policy is critical to innovation, which is critical to the economy, says Weingrod. The innovation ecosystem is extremely fragile among multinationals and I hesitate to think what will happen to it under pillar 2

P2's substance-based carveout is only thinking about tangible assets, IP is not considered substance and innovation is ignored. There's also a ceiling imposed on value of incentives and uneven treatment of refundable vs. nonrefundable tax credits, says Weingrod

Weingrod: I'm concerned that when we look back at this moment, we are going to wonder what we were thinking when it came to innovation #OECDTaxConference

Lots of audience questions coming in, many about the likelihood that Hungary will approve the EU P2 directive. Kreienbaum says that even if there is no directive, all the other EU member states are determined to move ahead with the pillar 2 rules #OECDTaxConference