Cross-border Tax Talks Podcast | ONE BIG BEAUTIFUL PODCAST - PART 1 (House version) | Pat Brown

Doug McHoney (PwC’s International Tax Services Global Leader) is joined on June 12, 2205, by Pat Brown, an International Tax Partner and Co-Leader of PwC’s Washington National Tax Services practice. Pat previously served as the US Treasury’s Associate International Tax Counsel and has been a frequent guest on the podcast. Doug and Pat discuss the legislative and international tax implications of the 'One Big Beautiful Bill' (OB3), including its procedural path through US Congress under budget reconciliation, and its implications for both domestic and cross-border taxpayers. They explore the bill’s temporary business provisions, including TCJA 'orphan' fixes, and the evolving treatment of research expenses, bonus depreciation, and interest deductions. A major focus
is Section 899—dubbed the 'super BEAT'—which targets foreign digital services taxes (DSTs), diverted profits taxes (DPTs), and Pillar Two’s undertaxed profits rule (UTPR) with steep retaliatory measures. They also analyze the international negotiations around UTPR exemptions, the impact on treaty obligations, and the ongoing debate over treatment of US tax credits—particularly the R&D credit—under global minimum tax rules.

Timestamps and Descriptions

00:00 – Introduction and Pat Brown’s return as guest

01:30 – Baseball banter: Reds vs. Cardinals and hope for underdogs

04:00 – Introduction to the 'One Big Beautiful Bill Act' (OB3) and legislative background

05:00 – How reconciliation bills work and differ from ordinary legislation

06:30 – House and Senate roles, and the procedural steps remaining

08:30 – Trump’s July 4th deadline: realistic or not?

10:05 – The razor-thin margin in the House and implications for Senate changes

12:00 – What if the OBBB bill fails? Alternate paths and bipartisan fallbacks

14:40 – Policy volatility from administration to administration

15:35 – Key business provisions: Research expenses (Section 174), Interest limitations (Section 163(j)), and expensing (bonus) depreciation

18:50 – GILTI, FDII, and BEAT: Rate 'notches' and permanence

20:20 – Policy levers: Will GILTI be adjusted to satisfy OECD?

21:10 – Introduction to Section 899: US response to UTPR and DSTs

24:00 – First mechanism to ‘unfair taxes’: Retaliatory 5% tax escalator

27:20 – Treaty override implications and the 'later in time' doctrine

29:45 – What is the BEAT and how does it work?

34:50 – Section 899’s expansion to routine services and certain COGS

36:40 – Effective dates: 2026 and challenges for countries to respond

38:25 – Treasury cannot have full discretion under reconciliation scoring rules

39:15 – $116B revenue estimate: Front-loaded assumptions and revenue loss in out years

43:15 – US Treasury’s key negotiating position on UTPR. Will the EU change the directive?

46:40 – R&D credit and other non-refundable credits under Pillar Two

49:50 – Impact of repealing transferability of IRA credits

51:15 – Divergence between Treasury goals and what’s codified in 899

53:55 – What about: the EU directive, the impact of tariffs, etc?

55:00 – What should taxpayers be considering now?

58:20 – Final recommendations: Model 899, get involved in the process within and outside the United States, educate policymakers