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A key aspect of Pillar Two is that the GloBE Rules are implemented uniformly by domestic jurisdictions.
From the legislation (both draft and enacted) released to date, whereas there are few and relatively minor differences from the OECD Model Rules, there are significant differences in the extent to which the OECD Administrative Guidance is reflected.
This is to be expected. Jurisdictions have had a number of years to implement the OECD Model Rules, but the lead time from the Administrative Guidance is much shorter.
| First Set of OECD Administrative Guidance | |
|---|---|
| 1.1 | Rebasing monetary thresholds in the GloBE Rules |
| 1.2 | Deemed consolidation test |
| 1.3 | Consolidated deferred tax amounts |
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity |
| 1.5 | Clarifying the definition of ‘Excluded Entity’ |
| 1.6 | Meaning of “ancillary” for Non-Profit Organisations |
| 2.1 | Intra-group transactions accounted at cost |
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations |
| 2.3 | Excluded Dividends – Asymmetric treatment of dividends and distributions |
| 2.4 | Debt release Election |
| 2.5 | Accrued Pension Expenses |
| 2.6 | Covered Taxes on deemed distributions |
| 2.7 | Excess Negative Tax Carry-forward guidance |
| 2.8 | Substitute Loss carry forwards |
| 2.9 | Equity Gain or loss inclusion election |
| 2.10 | Allocation of taxes arising under a Blended CFC Tax Regimes |
| 3..1 | Application of Taxable Distribution Method Election to Insurance Investment Entities |
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity |
| 3.3 | Restricted Tier One Capital |
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders |
| 3.5 | Simplification for Short-term Portfolio Shareholdings |
| 3.6 | Application of Tax transparency election to mutual insurance companies |
| 4.1 | Deferred tax assets and tax credits under Transitional Rules |
| 4.2 | Applicability of Transitional Rules to transactions similar to asset transfers |
| 4.3 | Asset carrying value and deferred taxes under Transitional Rules |
| Second Set of OECD Administrative Guidance | |
| 1 | Currency Conversion Rules |
| 2 | Tax Credits Guidance (MTTCs) |
| 3 | SBIE Rules |
| – Foreign rules | |
| – Stock-based compensation election |
|
| – Lease |
|
| – Impairment losses inc in tangible asset value |
|
| 4.1 | QDMTT Safe Harbour |
| 4.2 | UTPR Safe Harbour |
| Third Set of OECD Administrative Guidance | |
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) |
| 2.2.1 | Transitional CbCR – JVs |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting |
| 2.3.2 | Transitional CbCR – Using different accounting standards |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Misatches |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements |
| 3.1 | Identifying Consolidated Revenue |
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity |
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity |
| 4.2.1 | Blended CFCs – multiple GloBE Jurisdictional ETRs |
| 4.2.2 | Blended CFCs – not required to calculate an ETR |
| 4.2.3 | Blended CFCs – income of non-GloBE Entities |
| 5.3 | 30 June 2026 filing deadline |
| 6 | NMCE Simplified Calculations |
| Fourth Set of OECD Administrative Guidance | |
| 1.2.1 | Aggregate DTL Category basis |
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking |
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs |
| 1.2.1 | Exclusion of swinging accounts and separate tracking |
| 1.2.2 | FIFO/LIFO basis |
| 1.2.2 | Aggregation of Short-term DTLs |
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year |
| 1.2.2 | 5-year unclaimed accrual election |
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value |
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules |
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost |
| 2.1.2 | Exclusion of GloBE carrying value from SBIE |
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps |
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income |
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries |
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, Hybrids and Rev Hybrids |
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process |
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids |
| 4.2.3 | Exclusion of Blended CFC Tax Regime deferred tax assets or liabilities from transition rules |
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity |
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities |
| 5.3.5 | Non-group owners: Indirect minority ownership |
| 5.4.2 | Taxes allocated to a flow through entity |
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners |
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system |
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids |
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT |
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions |
| 6.1.4 | Amendments to the Switch-Off Rule |
| 6.1.4 | New definition: Securitization Entity |
| 6.1.4 | New definition: Securitization Arrangement |
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