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.

The substance-based income exclusion favours capital intensive and certain low profit margin companies. These companies stand to benefit the most.

The Fourth Set of OECD Administrative Guidance (issued on June 17, 2024) includes guidance on the treatment of Securitization Entities.

Section 5 of the Fourth Set of OECD Administrative Guidance (published on June 17, 2024) provides clarifications on the allocation of both profits and taxes of Flow-through Entities (including both hybrid entities and reverse hybrid entities). Most of these changes are to ensure the consistent matching of income and taxes in the same entity.

On June 17, 2024, the OECD provided more information on the Transitional Qualification Mechanism for determining the qualified status of IIRs and Domestic Minimum Taxes

Section 2 of the Fourth Set of OECD Administrative Guidance (issued on June 17, 2024) provides details of the use of GloBE carrying values and the impact that these will have on the GloBE ETR calculation.

Section 1 of the Fourth Set of OECD Administrative Guidance (issued on June 17, 2024) provides further details on the deferred tax liability recapture rule. Read our detailed analysis.