The Pillar Two Rules include specific provisions for tax transparent entities to avoid artificially low effective tax rates and significant top-up tax, particularly for tax transparent UPEs.
Centralized HR/payroll companies are frequently used by MNE groups but raise specific issues in relation to the Pillar Two GloBE Rules. In particular, the impact of using a centralized function and the nature of recharges could have an impact on the substance-based income exclusion of group entities.
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 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.
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.
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.
On March 28, 2024, the Decree on the minimum taxation of large groups of undertakings (the ‘GloBE Regulation’) was published in the Official Gazette.
The definition of CFC taxes that are restricted in the GloBE rules is much narrower than under many domestic CFC regimes. In this article we look at this issue.
The GloBE rules include a number of insurance specific adjustments. In this article we look at the nature of these provisions as well as the impact of the GloBE rules on insurance companies generally. Updated for OECD Administrative Guidance.
On March 19, 2024, the Swedish Ministry of Finance issued a proposal (including Draft Legislation and Explanatory Notes) to amend its Pillar Two law to include relevant provisions of the OECD Administrative Guidance.
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