Latest Articles

registration

GloBE Implementation: Domestic Registration Requirements

Many jurisdictions will require GloBE registration for administrative purposes, however, the law issued to date has been inconsistent. We outline the GloBE registration obligations from the domestic legislation (enacted and draft) issued to date, with citations and links to relevant laws.

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flow-through entities

OECD Issues Clarifications and Amendments to GloBE Flow-Through Taxation

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.

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OECD Issues Fourth Set of Administrative Guidance

On June 17, 2024 the Fourth set of OECD Administrative Guidance was issued. This includes guidance related to the recapture rule applicable to deferred tax liabilities, cross-border allocation of current and deferred taxes, flow-through entities and securitisation vehicles.

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Private Equity Fund Structure

Cross-Border Deals After Pillar Two

In this article we look at some of the most significant issues to consider including the determination of when and how deals can bring groups within the scope of Pillar Two, specific considerations for private equity funds, differences in GloBE and domestic tax treatment and potential restrictions on post-acquisition transfers. 

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The Impact of Pillar 2 on Group HR/Payroll Companies

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.

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commercial property

Investment Property & The GloBE Rules

Whilst the treatment of investment property for financial accounting purposes is important when determining the GloBE treatment, of even more importance are any differences between the financial accounting treatment and the domestic tax treatment.

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Data Points For the Transitional CbCR Safe Harbour

The Transitional CbCR Safe Harbour is a short-term measure that will allow an MNE to avoid undertaking detailed GloBE calculations for a jurisdiction if certain requirements are met. Data will need to be extracted from the CbC Report, financial statements and ERP and EPM systems. Group structure information will also be required.

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The Impact of the Different ETR Calculation for Investment Funds

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.

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GloBE Country Guide: Poland

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.

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GloBE Country Guide: Barbados

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.

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Purchase accounting adjustments

Joint Ventures and the Allocation of Pillar Two Top-Up Tax

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.

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greek flag

Greece Enacts Pillar Two Law

On April 5, 2024, Law 5100/2024 was published in the Official Gazette. This implements the EU Minimum Tax Directive in Greece from December 31, 2023 (with the UTPR applying from December 31, 2024).

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GloBE Country Guide: Australia

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Australia for accounting periods beginning on or after January 1, 2024. Updated for the draft legislation issued by the Australian Treasury on March 21, 2024.

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GloBE Country Guide: Belgium

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Belgium for accounting periods beginning on or after December 31, 2023. Updated for the Draft Law to amend the ‘Act on the introduction of a minimum tax for multinational enterprise groups and large domestic groups’ of March 6, 2024.

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GloBE Country Guide: Thailand

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Thailand for accounting periods beginning on or after January 1, 2025. Updated for the Draft Law issued on March 1, 2024.

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GloBE Country Guide: Malta

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Malta for accounting periods beginning on or after 31 December, 2023. Updated for Legal Notice 32 of 2024 of February 20, 2024.

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GloBE Country Guide: Austria

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Austria for accounting periods beginning on or after 31 December, 2023. Updated for the Minimum Taxation Reform Act published in Austrian Federal Law Gazette No. 187/2023 on December 30, 2023.

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GloBE Country Guide: Slovakia

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Slovakia for accounting periods beginning on or after 31 December, 2023. Updated for Act No. 507/2023 of December 23, 2023.

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GloBE Country Guide: Czech Republic

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in the Czech Republic for accounting periods beginning on or after 31 December, 2023. Updated for Law 416/2023 published in the Official Gazette on December 29, 2023.

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Treatment of R&D Tax Incentives under the Pillar 2 GloBE Rules

Tax incentives for R&D are a common way for a jurisdiction to attract foreign direct investment (FDI).
In this article we look at the financial accounting, domestic tax and Pillar Two treatment of some of the key incentives offered including a deduction, capitalized treatment, a super deduction, tax credits and patent boxes or other similar arrangements.

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GloBE Country Guide: Croatia

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Croatia for accounting periods beginning on or after 31 December, 2023. Updated for Law No 155/23, of December 22, 2023.

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GloBE Country Guide: Norway

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Norway for accounting periods beginning on or after 1 January 2024. Updated for Law 2024-01-12-1 of January 12, 2024.

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GloBE Country Guide: Ireland

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Ireland from 2024. Updated for the Finance (No. 2) Act 2023 of December 18, 2023.

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GloBE Country Guide: Romania

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Romania for accounting periods beginning on or after 31 December, 2023. Updated for Law No. 431/2023 of December 29, 2023.

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GloBE Country Guide: Finland

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Finland for accounting periods beginning on or after 31 December, 2023. Updated for the ‘Law on the Minimum Taxation for Corporations’ of December 28, 2023.

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GloBE Country Guide: France

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in France for accounting periods beginning on or after 31 December, 2023. Updated for the French Finance Act published on December 30, 2023.

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GloBE Country Guide: Bulgaria

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Bulgaria for accounting periods beginning on or after 31 December, 2023. Updated for the Law Amending the Corporate Income Tax Act on December 22, 2023.

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GloBE Country Guide: Switzerland

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Switzerland from January 1, 2024. Updated for the Ordinance on the Minimum Taxation of Large Groups of December 22, 2024.

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GloBE Country Guide: Italy

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Italy for accounting periods beginning on or after 31 December, 2023. Updated for Legislative Decree No. 209 of December 27, 2023.

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GloBE Country Guide: Luxembourg

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Luxembourg for accounting periods beginning on or after 31 December, 2023. Updated for the draft law n°8292 approved by Parliament on December 20, 2023.

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GloBE Country Guide: Sweden

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Sweden from January 1, 2024. Updated for Law No. SFS 2023:875 of December 16, 2023.

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Malaysia to implement Pillar Two

GloBE Country Guide: Malaysia

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Malaysia for accounting periods beginning on or after January 1, 2025. Updated for the law approved by Parliament on December 13, 2023.

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GloBE Country Guide: Denmark

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Denmark for accounting periods beginning on or after 31 December, 2023. Updated for the final law enacted on December 12, 2023 and the Draft Law of April 30, 2024.

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The Czech Republic Approves and Updates its GloBE Law

On December 1, 2023, the Czech Parliament approved the Draft Top-up Tax Act to give effect to the GloBE rules.
There were limited amendments to the draft law during the parliamentary process (including the inclusion of the QDMTT and Transitional UTPR Safe Harbour, and other key aspects of the July 2023 Administrative Guidance, such as the rules for transferable tax credits).

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GloBE Country Guide: Japan – Update

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Japan from April 1, 2024, as updated by the detailed implementation guidance issued by the Ministry of Finance on October 20, 2023,

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Kuwait Considers Pillar Two Application

It was reported on October 23, 2023, that Kuwait is considering a comprehensive overhaul of its tax laws from January 1, 2025 to apply a 15 percent corporate tax on the profits of all legal persons, including major international companies.

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A Review of Austria’s Draft Pillar Two Law

On October 3, 2023, the Austrian Federal Ministry of Finance issued the ‘Federal law enacting the Federal Act to Ensure a Global Minimum Taxation for Groups of Companies’ to implement the Pillar Two GloBE rules/EU Minimum Tax Directive.

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Taiwan Confirms No Pillar 2 Schedule, But An Increase To Its Domestic Minimum Tax Rate From 2024

Taiwan’s Ministry of Finance confirmed today there is no set schedule for the introduction of the Pillar 2 GloBE rules in Taiwan. Taiwan’s Ministry of Finance has previously stated it will prepare draft legislation for the government to increase Taiwan’s domestic minimum tax rate from 12% to 15%.
However, this creates a number of issues in terms of its interaction with the Pillar Two global minimum tax.

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South Korea Issues Draft Pillar 2 Amendment Law

On July 28, 2023, the South Korean government published the Partial Amendment Proposal for the International Tax Adjustment Act, to amend their Pillar Two law to (1) take account of a number of OECD amendments issued in their Administrative Guidance, and (2) delay the implementation of the UTPR until January 1, 2025.

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How the QDMTT Safe Harbour Applies

The QDMTT Safe Harbour excludes the application of the GloBE Rules in other jurisdictions by deeming the Top-up Tax payable under the GloBE Rules to be nil where top-up tax is levied under a QDMTT. In this article, we look at how it applies.

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Pillar Two GloBE Rules and Estonia’s Distribution Tax

A key issue with a distribution tax regime such as Estonia’s is that a company may not distribute profits for a number of years. They would have GloBE income but no or limited tax suffered on that income which would lead to a sizeable Pillar Two top-up tax liability. As such a distribution tax regime election is available.

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Pillar Two: AI Powered Research Tool

Pillar Two: AI-Powered Research Tool

Members have access to our Pillar Two AI-powered Analysis Tool.  This is a custom AI model trained on Pillar Two data from our members-only content including our Pillar Two Navigator and Jurisdictional analysis. 

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Pillar Two and Transfer Pricing

The Pillar Two Rules generally require transactions between entities located in different jurisdictions to be priced at an arms-length basis. However, special rules apply to unilateral transfer pricing adjustments given the risk of income either being taxed twice or not taxed at all.

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The Netherlands Sends GloBE Minimum Tax Bill to Parliament

The Netherlands presented the Minimum Tax Bill, 2024 to Parliament yesterday. It implements an Income Inclusion Rule and a Qualified Domestic Minimum Top-Up Tax for financial years commencing on or after December 31, 2023. An Under-Taxed Profits Rule applies for financial years commencing on or after December 31, 2024.

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QDMTT Legislative Tracker

QDMTT: Legislative Tracker

Track the development and application of QDMTTs as they are implemented globally. The OECD Administrative Guidance provides significant flexibility as to their design.

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Domestic Implementation of the GloBE Rules: Differing Approaches

A number of jurisdictions have issued legislation (either draft or enacted) to implement the Pillar Two GloBE Rules, however, the approach taken differs significantly. In this article we look at domestic differences not only from the OECD Model Rules, but differences in the implementation of the rules between jurisdictions.

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Vietnam Aims To Submit Pillar 2 Law In June 2023

Local reports state that the Ministry of Finance is collecting feedback on its proposals to develop the Global Minimum Tax Law and will submit it to the Government in June 2023. Submission to the National Assembly is planned for its 6th Session in October 2023.

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data points for the substance-based income exclusion

Deferred Tax Data Points For The Pillar 2 GloBE Rules

Many of the deferred tax data points are not stand-alone data sources but arise as a result of further calculations that are themselves based on underlying data-sources. There is therefore a ‘layering-up’ of data before the GloBE calculations can be effectively made.

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English Translation of the Swedish Global Minimum Tax Law

In February, 2023, the Special Investigator submitted the interim report on the proposal for the implementation of the Global Minimum Tax Directive to the government. We have an English translation of the interim report (running to over 400 page) available to all site members. 

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Treatment of CFC Taxes: QDMTTs vs GloBE Rules

Under Article 4.3.2(c) of the OECD Model Rules, tax paid under a CFC regime is generally allocated for GloBE purposes to the CFC entity. However, Article 5.1.3 of the OECD Administrative Guidance confirms that this is not the case for Qualified Domestic Minimum Top-Up Taxes (QDMTTs). 

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OECD CbC Data

Updated Pillar 2 Modelling Tool – OECD CbC Data

Our Modelling Tool takes the underlying source data from the OECD aggregated CbC source data and subjects it to a data manipulation process to provide a drill down into some of the key metrics and data sources that are relevant for Pillar Two on a jurisdictional basis. 

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IIR Calculator

Income Inclusion Rule Calculator

Use our members Income Inclusion Rule Calculator to see how the IIR applies. Enter details of the low-taxed entity including jurisdictional GloBE income and other relevant information to determine top-up tax payable by the parent company. 

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QDMTT Design Features

UPE Data Points for the GloBE Information Return

In this first of a series of articles that will break down all of the data points for the purposes of the Pillar Two GloBE rules (and in particular the expected reporting in the GloBE information return), we look at the UPE data points in the corporate structure.

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USA Pillar 2

U.S Updates its GloBE Impact Document

On December 21, 2022, the Congressional Research Service updated its policy document: The Pillar 2 Global Minimum Tax: Implications for U.S. Tax Policy following the EU adoption of the Global Minimum Tax Directive. 

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New Zealands Approach to Pillar Two

There are features of the NZ regime that raise issues from a Pillar Two perspective. Some of these were addressed in a Pillar Two consultation document issued earlier this year. In this article we look at some of the key issues in the implementation of Pillar Two for New Zealand.

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Pension Fund

Pension Funds & Pillar Two

Pension funds are subject to a number of specific provisions under the Pillar Two rules. In this article we look at some of the key aspects of Pillar Two that impact on Pension Funds.

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IASB announcement

IASB Agrees to Amendments for Pillar Two Accounting

Whilst a number of the measures follow the proposals in the November Staff Paper, the prospect of certain other additional disclosures not previously suggested, has been put forward.  In this article we review the IASB’s announcement and proposed changes. 

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OECD corporate tax statistics

Pillar 2 Insights From Yesterday’s OECD Corporate Tax Statistics Report

The OECD issued the Fourth Edition of its Corporate Tax Statistics report yesterday. The Press Release that accompanied the report stated that the report supported the need to press forward with the OECD Two-Pillar Solution to address base erosion issues. In this article we look at some of the key insights and highlights from the report. 

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A Pillar Two Review of Taiwan’s Tax Regime

In this article we take a detailed look at Taiwan’s tax regime from a Pillar Two perspective. Key aspects covered include tax incentives provided by the Statute for the Establishment and Management of Free Trade Zones, the Statute for Industrial Innovation and the provisions of the Income Tax Act.

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Accounting standards and how they impact on Pillar Two

Pillar Two Accounting Disclosures Under IFRS

IAS 1, IAS 10 and IAS 12 all have provisions that can impact on the required disclosures in financial statements for Pillar Two, however, the key determinant will be whether the domestic tax law to implement the Pillar Two GloBE Rules has been announced, substantively enacted, or enacted before the financial statements are issued.

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Joint Statement – Pillar Two Gains Momentum in the EU

Germany, France, Italy, Spain and the Netherlands issued a joint statement stating that if agreement is not reached on Pillar Two in ‘the next few weeks’ they will push forward domestic implementation of the Pillar Two GloBE rules ‘by any possible legal means’ in 2023. 

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A Review of the Amount A Double Tax Relief Rules

The Amount A elimination of double taxation provisions in Title 5 of the Progress Report on Amount A of Pillar One apply to prevent a multinational group being taxed twice on profits allocated to a market jurisdiction where there is already some form or physical establishment that is subject to tax. 

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Pillar Two GloBE Loss Election – Friend or Foe?

The Pillar Two GloBE loss election can only be made once per jurisdiction. Therefore it’s essential to identity whether this will be beneficial or not. There may be some cases (such as where there is no deferred tax in a jurisdiction or where corporate income tax rates are very low) that this could swing the balance in favour of making an election. But what about the impact of other timing differences? In this article we look at the pro’s and con’s of making a GloBE loss election, including examples to illustrate key issues.

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UK Multinational Top-Up Tax Calculator

The UK published draft legislation on July 20, 2022, to implement a ‘multinational top-up tax’ in line with Pillar Two of the OECDs Two-Pillar Solution. We have produced a calculator to illustrate the key aspects to the calculation of the multinational top-up tax.

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under-tax payments rule calculator

UTPR Calculator

This Pillar Two under-taxed payments rule (UTPR) calculator gives an indication of the broad operation of how the top-up tax is allocated to UTPR jurisdictions.

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How does Pillar Two Impact Trusts and Foundations?

The Pillar Two rules don’t just apply to companies. They apply to ‘entities’ which can include Trusts and Foundations. The application of the Pillar Two rules to Trusts and Foundations can give rise to a number of issues. Read our member article on some of the practical issues to consider.

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Pillar Two Deferred Tax Liability Calculator

Deferred Tax has a significant impact on the Pillar Two effective tax rate (ETR) and therefore on any top-up tax that may be levied. Use our Pillar Two Deferred Tax Liability Calculator to model the impact on the Pillar Two top-up tax.

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How does Pillar One Tie into Pillar Two?

Although Pillar One and Pillar Two are largely separate, the draft Pillar One rules issued by the OECD on July 11, 2022 include some interesting overlaps with Pillar Two.  Read our analysis of how Pillar One ties into Pillar Two.

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QDMTT Design Features

Pillar One Profit Allocation Calculator

On July 11, 2022, the OECD released a progress report on its Two Pillar Solution. This included draft rules on Pillar One. Whilst these draft rules are subject to a consultation, they nevertheless make interesting reading, particularly as there has, to date, been very little detailed information on the marketing and distribution profits safe harbour. Use our Pillar One profit allocation calculator to see the impact of the profit reallocation and marketing and distribution profits safe harbour.

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Pillar Two Implementation is Inescapable

This is according to an OECD progress report issued yesterday which states that “…implementation of the global minimum corporate tax seems ineluctable.” Whilst mainly focusing on Pillar One of the Two-Pillar framework, the report does provide a useful update on the status of Pillar Two’s global implementation and the OECDs opinion on how its progressing. 

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image showing example group structure if the US did not implement pillar two

What Happens if the US Doesn’t Implement Pillar Two?

There’s been a lot of speculation as to whether the US in particular will be able to enact legislation to implement Pillar Two in the near future. This then raises the question as to exactly what would happen?

The answer depends on whether the ‘tipping point’ has been reached. The Pillar Two rules depend on a certain critical mass of jurisdictions implementing Pillar Two. Once this point is reached there would be significant disadvantages to not implementing Pillar Two.

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Pillar Two Deferred Tax Asset Calculator

Deferred Tax is a key element of the Pillar Two Rules, aimed at smoothing out the effective tax rate to address timing differences. This simple Pillar Two deferred tax calculator shows the broad operation of a deferred tax asset and its impact on the effective tax rate and top-up tax.

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UK draft legislation for Pillar Two

UK Draft Legislation for Pillar Two – What to Expect?

The UK is set to publish draft legislation to implement Pillar Two of the OECDs Two-Pillar Solution in July 2022. In this post we consider the key outstanding matters relating to the UK’s implementation of Pillar Two, including: Application to Small Groups, The Undertaxed Profits Rule, Reporting and Payment, Joint and Several Liability, CbC Simplification and a Domestic Minimum Tax.

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The Importance of Domestic Minimum Taxes Qualifying as QDMTT

Qualifying Domestic Minimum Top-Up Taxes (QDMTT’s) are a key part of the top-up tax calculation. Jurisdictions are free to introduce them or not and they are taken into account when calculating jurisdictional top-up tax. In this article we look at why a domestic minimum tax would need to be set at above 15% if it was not a qualifying domestic minimum top-up tax.

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Tax Incentives that Don’t Reduce the Pillar Two Effective Tax Rate

The effective tax rate (ETR) under the GloBE rules is compared to the 15% global minimum rate for the purposes of determining whether a jurisdiction is a low-taxed jurisdiction and whether any top-up tax is potentially due.

Therefore, MNE’s will be looking to avoid reducing their ETR where they are either below or just above the 15% global minimum rate.

In this article we look at some of the key tax incentives under the GloBE rules that don’t impact on the GloBE effective tax rate.

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Analysis of R&D Tax Credit Regimes Internationally and their Treatment under Pillar Two

Tax credits under the Pillar Two GloBE rules can be either refundable or non-refundable. A qualifying refundable tax credit is treated as income for Pillar Two purposes as opposed to a reduction in covered taxes. This can have a significant impact on the MNE’s effective tax rate. In this article we provide an analysis of R&D tax credit regimes internationally to determine which are, and which aren’t, qualifying refundable tax credits.

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