Updated GloBE Guide: Canada
May 2, 2024
Analysis of the implementation of the Pillar Two GloBE rules for Canada, updated for the Budget Implementation Bill, 2024, No. 1, issued on April 30, 2024.
Global Minimum Tax
In Today’s 2023 Budget, Hong Kong’s Financial Secretary confirmed that Hong Kong will implement the Pillar Two Global Minimum Tax from 2025.
They estimate that it will generate tax revenue of $15 billion per year for the Government. A consultation is to be launched to allow MNE groups to make early preparation.
It was also announced that Hong Kong will be introducing a Patent Box.
Given the significant foreign direct investment (FDI) into Hong Kong (in 2021 FDI inflows into Hong Kong were US$140.7 billion, the 3rd highest globally behind the United States and Mainland China), it is expected that there will be other ancillary adjustments over the next 2 years to the domestic tax regime to ensure Hong Kong remains internationally competitive after the GloBE rules are introduced.
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Analysis of the implementation of the Pillar Two GloBE rules for Canada, updated for the Budget Implementation Bill, 2024, No. 1, issued on April 30, 2024.
Whether multinationals adopt a centralized or decentralized approach to Pillar Two will be one of the key factors in correctly establishing the systems and architecture to collect, manage, analyse and store source data for the Pillar Two effective tax rate and top-up tax calculation.
The Pillar Two effective tax rate (ETR) calculation for investment entities is similar to the standard ETR calculation, however, there is an important twist in that the top-up tax is adjusted for minority interests. There is no adjustment for minority interests under the standard ETR calculation. In this article we look at the impact of this.
On April 25, 2024, the Polish Ministry of Finance issued a draft law to implement the EU Minimum Tax Directive into domestic law. Read our review of the draft law.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Poland on or after January 1, 2025. Updated for the draft legislation issued by the Polish Ministry of Finance on April 25, 2024.
The tax data mapping assessment is the cornerstone for MNEs looking to implement an effective approach to manage Pillar Two. All systems changes flow from this.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Barbados for accounting periods beginning on or after January 1, 2024. Updated for the draft legislation being considered by the Barbadian Parliament.
The Pillar Two rules include specific rules for Joint Ventures (JVs) that would otherwise not be within the scope of Pillar Two due to not being consolidated in the financial accounts of the MNE group. However, of more interest is how the amount of top-tax tax (and by implication the amount not collected) varies depending on the JV group structure. Read more in this article.
MNE groups should pay careful attention to any group financing companies in light of the Pillar Two Rules. In this analysis we look at the impact of Pillar Two under for both general GloBE and QDMTT purposes.
On March 22, 2024, the Decree of the Ministry of Economy and Finance No. 1048, to amend the Enforcement Regulations of the International Tax Adjustment Act entered into force.
On March 22, 2024, the Enforcement Regulations to the International Tax Adjustment Act were amended. This includes attachments for the GIR (in English and Korean), the GloBE Tax Return and the Notification Form for a Foreign CE to File the GIR.
Whilst the OECD Model Rules require the application of the IIR to Low-Taxed Constituent Entities outside the jurisdiction, the Commentary permits the application of the IIR domestically (a ‘DIIR’). Both New Zealand and the EU apply a DIIR.
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