The American Institute of CPAs (AICPA) submitted comments to the US Department of the Treasury and Internal Revenue Service (IRS) in response to Notice 2023-80, which provides guidance on the foreign tax credit and dual consolidated losses in relation to the Global Anti-Base Erosion (GloBE) Model Rules, or Pillar Two.

The Notice addresses the foreign tax credit rules and the dual consolidated loss rules, to certain types of taxes described in the Organisation for Economic Co-operation and Development (OECD’s) GloBE Model Rules.

The Pillar Two rules create a coordinated system of minimum taxation intended to ensure that Multinational Enterprise (MNE) Groups with annual revenue of 750 million euros or more pay a minimum level of tax on the income arising in each jurisdiction in which they operate.

The latest comments provided are in addition to comments sent in December regarding OECD tax issues. The most recent letter addresses the following areas:

1.       The collateral impact of Pillar Two taxes on controlled foreign corporation (CFC) inclusions and the application of section 952(c) limitation.

2.       The interaction between the Dual Consolidated Loss (DCL) rules and the jurisdictional blending rules under Pillar Two.

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3.       Request for further guidance providing more certainty as to the creditability of certain Pillar Two taxes.

4.       Treatment of specific Pillar Two taxes within the context of a foreign law inclusion regime under Treas. Reg. § 1.861-20(b)(11).

5.       Request clarification on the application of the rules in Notice 2023-80 providing an extension of the temporary relief previously provided in Notice 2023-55.

AICPA senior manager for tax policy and advocacy, Reema Patel, concluded: “AICPA’s comment letter highlights some of the areas that we believe Treasury and the IRS should consider as they work toward proposed regulations.

“Our goal was to identify the challenges taxpayers would face with the current Notice and advocate for further clarification.”