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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.

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Insurance Companies

The Pillar Two GloBE Rules & Insurance Companies

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.

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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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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 the August 2023 draft top-up tax act.

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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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Estonia Flag

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 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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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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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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Joint Ventures and Pillar Two

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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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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UK flag

GloBE Country Guide: The United Kingdom

Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in the United Kingdom for accounting periods beginning on or after 31 December 2023, as provided in the 2023 Spring Finance Bill.

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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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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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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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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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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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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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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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image showing 'international analysis of R&D and Pillar Two'

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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