A Review of the OECDs Second Set of GloBE Administrative Guidance

On July 17, 2023, the OECD issued its second set of Administrative Guidance on the application of the Pillar Two GloBE Rules. This follows the first set of Administrative Guidance that was issued in February 2023.

This new guidance provides additional information on a number of areas including:

 – currency conversion rules;

 – tax credits;

 – the application of the Substance-based Income Exclusion (SBIE);

 – the design of Qualified Domestic Minimum Top-up Taxes (QDMTTs);

 – a QDMTT Safe Harbour; and

 – a Transitional UTPR Safe Harbour.

Whilst a lot of the provisions of  the AG can be implemented in domestic jurisdictions as Guidance, jurisdictions that have enacted detailed GloBE legislation (South Korea, Japan and the UK) will need to issue amending legislation/regulations for some aspects (including the new Safe Harbours).

Certain other jurisdictions (eg Germany, the Czech Republic and Denmark) include a QDMTT Safe Harbour in their draft legislation based on the EU Global Minimum Tax Directive. This does not, however, align with the OECD guidance on the QDMTT Safe Harbour. As such further amendments are likely to be made.

Foreign Currency

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