At a Glance

  • KPMG announced on Tuesday that Michael Plowgian, who served as the U.S. international tax negotiating representative in the Biden administration, has returned to the firm. He will lead Washington National Tax and serve as the Americas International Tax Policy leader on the firm's global policy leadership team.
  • Plowgian stepped down in December from his role as Deputy Assistant Secretary for International Tax Affairs at the U.S. Treasury Department. He served as the U.S. negotiator in talks on the OECD's two-pillar tax reform package, which includes a 15% global minimum tax. While a growing number of other countries have joined the agreement, the U.S. Congress remains deadlocked on the matter.
  • Plowgian's return comes as finance chiefs at multinational companies face compliance pressure from the OECD's major tax overhaul, which requires companies to comply in countries that have adopted the directive. In an email to CFO Dive, Plowgian said: "In my new role, I will focus on helping multinational companies navigate the evolving and increasingly complex international tax landscape. The most pressing task right now is assisting clients with the complexities of implementing BEPS 2.0/Pillar Two."

In Depth

The global minimum tax is the core of "Pillar Two" under the OECD's "Base Erosion and Profit Shifting" project, aimed at creating a level playing field by curbing tax avoidance and closing tax havens. According to The Wall Street Journal, starting this year, large U.S. companies that previously enjoyed single-digit tax rates in certain jurisdictions outside the U.S. must pay at least a 15% rate in countries that have implemented the agreement.

Michael Plowgian
Michael Plowgian
Image source: KPMG
 

In response to CFO Dive's email question about "which tax risks keep you up at night," Plowgian emphasized the broad impact of Pillar Two rules on companies and the importance of taking immediate action.

"Although the U.S. has not signed the agreement, many U.S. multinationals will be affected through their international operations, and this impact should not be underestimated," he said. "Pillar Two rules are already applicable in more than 30 countries worldwide—across Europe, Japan, and South Korea, with Australia and Canada set to follow soon."

Plowgian also noted that the global minimum tax and two-pillar rules have broad cross-functional implications, affecting finance, accounting, IT, human resources, internal audit, and legal departments. "Compliance with this new regime cannot be achieved by the tax department alone. We believe the best-prepared companies will be those that assemble cross-functional teams to address it collaboratively."

Domestic debate in the U.S. over the impact of Pillar Two on companies has been ongoing and has hindered its implementation. U.S. Treasury Secretary Janet Yellen has long pushed for a global minimum corporate tax rate, but the initiative has faced strong opposition from many Republicans and other critics, some of whom argue it would lead to a loss of tax revenue and limit Congress's ability to set tax policy independently. CFO Dive has previously reported on this divide.

Looking ahead, Plowgian said that given 2024 is an election year, the path forward for the global minimum tax initiative in the U.S. is unlikely to open up within the year.

"As with any election year, the outcome is difficult to predict, but the likelihood of legislation passing before the election is very low. After the election, of course, it will depend on the new Congress," he said in the email. He believes that depending on the election results, the prospects for Pillar Two could become clearer next year or in 2026—when Congress will "very likely" consider a major tax bill, as numerous significant provisions are set to expire at the end of 2025. "In that context, adopting Pillar Two could become a way for Congress to fund other priorities," he said.