Calculate estimated GloBE top-up tax. Add unlimited companies and jurisdictions via an easy to use control panel to view potential jurisdictional liabilities.
Foreign tax credits interact with the Pillar Two GloBE Rules in a number of ways. In this article we assess the key impact.
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.
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.
Following the approval of the EU Global Minimum Tax Directive, Taiwan’s Ministry of Finance has 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.
Liechtenstein has announced it is to issue a consultation on a Pillar Two Global Minimum Tax in March 2023.
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.
In this article we take a comprehensive look at how the substance-based income exclusion applies including the various adjustments for permanent establishments and flow-through entities and the data points required.
Our Global Digital Services Tax Tracker has been updated to January 23, 2023.
In this article, we look at the potential impact of the Pillar Two GloBE Rules for MNEs operating in the Philippines.
On December 20, 2022, Indonesia issued Government Regulation No. 55/2022 on the Adjustment of Regulations in the Field of Income Tax. This included reference to the implementation of a global minimum tax in Indonesia as well a a desire to implement Pillar One.
Today’s OECD webinar on Tax challenges of digitalisation: Economic impact assessment of the Two-Pillar Solution reported that revenue gains from both Pillar One and Pillar Two is expected to increase from the previous economic impact assessment.
Just because the statutory rate of corporate income tax is significantly below 15% does not necessarily mean that top-up tax would apply under the Pillar Two global minimum tax rules. We look at why in this article.
With the enactment of the Pillar Two GloBE Rules in South Korea from January 1, 2024, the costs of an unintentional permanent establishment (PE) in South Korea may be significantly greater.
Our members-only modelling tool carries out the calculations based on the required inputted information to determine whether the Transitional CbCR Safe Harbour applies.
The GloBE Information Return will require information on an MNEs corporate structure in so far as it impacts the application of the Pillar Two GloBE rules. In this article we look at the data points that are required to comply with this.
As a members only resource, we include an unofficial English translation of the South Korean Global Minimum Tax Law (Law 19191 of December 31, 2022).
Today, the International Accounting Standards Board (IASB) issued an Exposure Draft for proposed amendments to IAS 12 to take account of the Pillar Two Model Rules.
On December 31, 2022 the first domestic law was enacted to give effect to the Pillar Two GloBE rules from January 1, 2024. Read more.
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.
The International Accounting Standards Board (IASB) has stated it expects to publish its Exposure Draft on the Pillar Two Model Rules on January 9, 2023. Read more.
The African Tax Administration Forum (ATAF) has released a Suggested Approach to Drafting Domestic Minimum Top-Up Tax Legislation under the Pillar Two GloBE Rules.
We can expect to see a substantial number of countries releasing and enacting legislation to implement Pillar Two in 2023.
On December 16, 2022, the ruling coalition issued the draft tax reform outline for 2023. This indicates that draft legislation to incorporate an income inclusion rule based on the OECD Model Rules will be put forward in 2023.
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.
On December 20, 2022, the OECD published a consultation document on the Pillar Two GloBE Information Return which includes 268 data points for MNEs to collect.
On December 20, 2022, the OECD published a consultation document on Tax Certainty for the GloBE Rules. We look at the key highlights.
On December 20, 2022, the OECD opened a consultation on the draft Multilateral Convention provisions for the removal of Digital Services Taxes and other similar measures under Pillar One.
Today the OECD announced details of two safe harbours and a penalty relief provision for the Pillar Two GloBE rules.
The Irish Finance Bill 2022 was published in October 2022 and includes some key changes to the corporation tax system to take account of the Pillar 2 rules.
December 16, 2022 saw more developments on the international implementation of Pillar Two. The Swiss parliament approved the draft constitutional amendment for enacting the GloBE rules and Azerbaijan joins the 2-Pillar solution.
Last night the Council of the European Union formally adopted (among other things) the EU Pillar Two directive as Poland pulled its veto at the last minute.
Following the recent preliminary agreement reached in the EU Council on the implementation of Pillar Two, Poland had asked for further time to consider the implementation of the EU Directive.
On 9 December 2022, the UAE issued the Federal Decree-Law No. (47) of 2022 on the taxation of corporations and businesses. In this article we look at the new UAE CT Law from a Pillar Two perspective.
The EU Council has reached agreement on the implementation of Pillar Two. As Pillar Two gains momentum the critical mass of countries required for effective implementation gets closer.
The OECD published a consultation document on Amount B of Pillar One today. We take an initial look at the key aspects of the Amount B consultation.
In this article, we take a look at Thailand’s tax regime from a Pillar Two perspective, with a particular focus on their tax incentives.
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.
Article 4.3.2(c) of the OECD Model Rules allocates tax paid on CFC income to the CFC entity (subject to a pushdown limitation). However, this leads to a situation where an MNE can reduce potential top-up tax by allocating more income to a CFC entity.
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.
Our Global VAT on Digital Services Tracker has been updated and now covers over 80 jurisdictions.
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.
Insurance Investment Entities are subject to special treatment under the Pillar Two GloBE Rules. Read our analysis of the key provisions.
Luxembourg is home to the second largest funds industry in the world and the largest in Europe. In this article we look at the Pillar 2 impact on Luxembourg private debt funds.
Use our Global map to determine the effective tax rate for R&D expenditure globally. Including the average R&D ETR per jurisdiction and the impact of incentives.
Following draft legislation issued in July 2022, the UK government confirmed in this week’s Autumn Statement that they will legislate to implement Pillar Two from 2024 including the UTPR and a QDMTT.
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.
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.
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.
The International Accounting Standards Board (IASB) will be discussing the approach to Pillar Two in its November 22, 2022 meeting. As preparation for this, a staff paper has been issued to outline a proposed approach to Pillar Two including a temporary exception and disclosure requirements.
MNEs within the scope of Pillar 2 are well advised to carry out a Pillar 2 Impact Assessment. In this article we look at the approach to a Pillar 2 impact assessment.
In this article we review Oman’s income tax laws from a Pillar Two perspective to highlight key issues to consider for MNEs with Omani subsidiaries or permanent establishments.
Undertaking an early Pillar Two Impact Assessment allows MNE groups to identify potential top-up tax, ascertain and implement changes to processes and systems and provides time to consider restructuring to efficiently plan for Pillar Two.
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.
In this 35-page report we take a systems-based approach to the GloBE rules and look at effective systems implementation to allow the Pillar Two GloBE ETR calculations to be undertaken.
In this article we look at why the correct determination of which tax credits are classed as Qualified Refundable Tax Credits is so important and the significant risks to the application of the Pillar Two rules they potentially pose if there is a non-harmonized approach.
The specific treatment of dividends and other distributions under the Pillar Two GloBE Rules raises some interesting issues and opportunities in blending such payments between otherwise low-taxed entities and holding companies to reduce any potential top-up tax liability.
Israel’s incentive regime offers significant tax incentives. In this article we assess the impact this may have on MNEs post Pillar Two.
In this article, we look at Singapore’s tax system and some of the key drivers of low ETRs for Pillar 2, including other factors that can temper any reduction.
On October 24, 2022, the Dutch Government released a consultation, including draft legislation, on the Pillar Two GloBE rules. See the key takeaways.
In this article we look at the impact of Pillar Two on tax stabilization agreements, and the benefits of renegotiating agreements.
In this analysis we look at the key corporate tax incentives and assess their potential FDI impact taking into account the Pillar Two GloBE Rules.
Jurisdictions that apply a territorial basis do not tax foreign source income. This raises some interesting issues in the application of the Pillar 2 rules.
The nature of the Pillar Two GloBE Rules means that in some cases, SPVs can lead to top-up tax that would not occur if a subsidiary was directly held.
In this analysis we look at the key features of China’s tax law that would need to be taken into account by MNEs with Chinese subsidiaries for Pillar 2 purposes.
In a post Pillar Two environment, the nature of tax incentives needs to be carefully considered to ensure that both MNEs and tax authorities derive benefits. In this analysis we model the impact of payroll tax incentives.
In this article we look at India’s corporate income tax regime and assess the impact of the Pillar Two GloBE Rules on MNE’s with operations in India.
Vietnam’s broad income-based tax incentives could impact on investment into Vietnam in a post Pillar Two environment. We look at the issues and policy options.
On October 6, 2022, the OECD issued the Progress Report on the Administration and Tax Certainty Aspects of Amount A of Pillar One (the ‘Progress Report’), which includes draft Model Rules on the administration of Amount A.
In this members article we look at key developments last week, including Ireland, Vietnam, Belgium and the OECD.
In today’s 2023 Budget Speech, the Malaysian government joined the growing number of countries that will implement the 15% global minimum tax under Pillar 2.
The OECD issued a report yesterday on tax incentives after Pillar 2. We look at the key takeaways including which tax incentives have the largest impact.
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.
On October 4, 2022, Australia issued a consultation paper on Pillar Two of the OECD Two-Pillar Solution. We look at the key aspects of the consultation.
Nigeria has rejected Pillar 1 and 2 on the basis that the thresholds would result in a loss of tax revenue. We look at the changes to domestic law to tax MNEs.
The Subject-to-Tax Rule is a key element of Pillar Two, and allows source jurisdictions to levy additional tax on certain payments. Read what you need to know.
MNE groups should pay careful attention to any group financing companies in light of the Pillar Two Rules. In this analysis we look at the impact of Pillar Two.
In this article we look at some of the key drivers that can result in Pillar 2 ETR’s being significantly different to the headline domestic tax rate.
The Netherlands has issued Parliamentary Paper 22112 (3278) in which it provides comments on the EU’s proposed directive for the implementation of Pillar Two.
The requirements for a participation exemption under domestic law may not match the exemption requirements in the Pillar Two Rules. Read our analysis.
In this article we look at the interaction between deferred tax on bonus depreciation and the substance-based income exclusion on investments in tangible assets.
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.
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.
It’s been reported that Barbados is to ask the OECD for more time to implement the Pillar Two GloBE Rules. Exactly what Barbados expects is still unclear.
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.
Identifying the data points required to apply the Pillar 2 rules is the first step in any tax data mapping MNEs undertake. We list the key 122 data points.
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.
Item 17 of the third relief package (issued September 4, 2022) states that Germany will start implementing Pillar 2. Read our initial thoughts on its enactment.
In most cases, a Qualifying Refundable Tax Credit will result in a higher Pillar Two effective tax rate than a non-qualifying tax credit. However, this is not always the case. We look at some examples in this article.
Whilst Pillar 1 and Pillar 2 are separate and independent of each other, there are areas where they overlap, most notably the inclusion of Pillar 1 tax for Pillar 2 purposes and the overlap in some of the adjusted profits definitions.
A number of the adjustments to the deferred tax expense under Pillar 2 will mean significant changes to ERP systems. See our list of all required adjustments.
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.
On July 22, 2022, South Korea released a draft law to implement the OECD’s Pillar Two GloBE Rules (the ‘draft law’) in legislative notice 2022-128. Read our analysis.
On August 17, 2022, the Swiss Federal Council issued a draft decree for the implementation of Pillar Two of the OECDs Two Pillar Solution from January 1, 2024. Read our detailed analysis.
The Revenue Sourcing Rules for Amount A are used to determine where an in-scope multinational group derives its revenues. This is then used in the profit reallocation calculation.
Use our interactive tool to quickly determine the relevant sourcing rule for each revenue type.
The Amount A reliable indicators are the practical methods of allocating revenue to jurisdictions for the purposes of the Pillar One, Amount A revenue sourcing rules.
Allocation Keys are a key aspect of the Amount A Revenue Sourcing Rules, which attribute revenue to the jurisdictions an MNE group operates in. This is then used when determining how much profit is reallocated to a jurisdiction.
The marketing and distribution profits safe harbour is included in Articles 6(3)-(6) of the Progress Report on Amount A of Pillar One. It is deducted
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.
The substance-based income exclusion favours capital intensive and certain low profit margin companies. These companies stand to benefit the most.
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