Tax incentives are a key determining factor for the Pillar Two GloBE effective tax rate (ETR).
Not all tax incentives have the same impact on the GloBE ETR/top-up tax, as is shown in this table.
|Tax Incentive||Type||Impact of the GloBE Rules||Effect on GloBE covered tax||Effect on GloBE income|
|Income-based incentive||Full exemption||Very likely||Decrease|
|Income-based incentive||Partial exemption||More likely||Decrease|
|Income-based incentive||Reduced rate||More likely||Decrease|
|Expenditure-based incentive||Tax allowance||More likely||Decrease|
|Expenditure-based incentive||Bonus depreciation/accelerated depreciation: tangible assets||Unaffected||No recapturing|
|Expenditure-based incentive||Bonus depreciation/accelerated depreciation: short lived intangibles||Less likely||Recapturing may |
|Expenditure-based incentive||Bonus depreciation/accelerated depreciation: other assets||More likely||Recapturing may |
|Expenditure-based incentive||Qualifying refundable tax credit||Less likely||Increase|
|Expenditure-based incentive||Other tax credit||More likely||Decrease|
Global tax incentives for intellectual property (IP) have grown significantly in recent years. The impact on any top-up tax will depend (amongst others) on the type of tax incentive, jurisdictional blending and the substance-based income exclusion.
Our Global IP Tax Incentives Tool provides high level analysis of IP tax incentives globally, including the tax rate reduction.
Choose up to 4 jurisdictions to compare the respective regimes.
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