Doug McHoney (PwC’s US International Tax Services Co-Leader) is joined by Ninee Dewar, PwC International Tax Services Principal, to discuss the recently released 2022 proposed foreign tax credit (FTC) regulations. These regulations relax some of the stringent creditability requirements that were set forth in the 2021 final FTC regulations. Doug and Ninee dive into changes to the cost recovery requirement, the attribution requirement for withholding tax on royalty payments, and the definition of a reattribution asset for purposes of allocating and apportioning foreign taxes.
Timestamps:
1:30 – One thing you miss about your lockdown experience?
2:45 – Can you give us an overview of the 2021 foreign tax credit regulations, and what made them controversial?
6:00 – What are the main provisions of the new 2022 proposed FTC regulations?
6:20 – The cost recovery requirement
Recovery of ‘substantially all’ of each item of significant cost or expense
Safe harbors
Principles-based exception
15:15 – Attribution requirement for withholding tax on royalty payments
As a refresher – what did the 2021 Final FTC regulations provide?
What was the welcomed change in the 2022 Proposed FTC regulations?
What is a single country license?
When is documentation required?
26:00 – Changes to the reattribution asset rule
29:20 – When are the 2022 FTC proposed regulations effective?
31:00 – what advice do you have for taxpayers in the immediate future?
Original source can be found here.
