Ways and Means subcommittee schedules hearing on Pillar Two issues

House Ways and Means Committee Chairman Jason Smith, R-Mo., and Tax Subcommittee Chairman Mike Kelly, R-Pa., announced this week that the Tax Subcommittee will hold a hearing on July 19 at 2:00 p.m. to examine issues related to the new global corporate minimum tax rules—known collectively as “Pillar Two”—that are being advanced through the OECD.

Pillar Two, which calls for jurisdictions to impose a minimum tax of 15 percent on the world’s largest multinational entities (MNEs) and includes several backstop rules to ensure these MNEs pay at least that level of tax on all of their worldwide income, has gained a broad base of support internationally but has hit a roadblock on Capitol Hill.

Although a specific agenda was not included in the hearing announcement, the title of the hearing—”Biden’s Global Tax Surrender Harms American Workers and Our Economy”—signals the likely tone of the discussion among the panel’s Republican majority.

Republican taxwriters in both chambers have long decried the OECD agreement that the Biden administration signed on to in 2021, and Chairman Smith has ratcheted up his criticism since taking the Ways and Means gavel earlier this year. Smith most recently has taken aim at Pillar Two’s undertaxed profits rule (UTPR), a final backstop to the minimum tax that some jurisdictions plan to enact. In late May, Smith and his GOP colleagues on the Ways and Means Committee introduced legislation that would impose retaliatory taxes—subject to annual increases—on the US income of foreign entities and individuals from countries implementing a UTPR or similar measure. (For prior coverage, see Tax News & Views, Vol. 24, No, 19, May 26, 2023.)

A witness list for the hearing was not available at press time.

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