Article 2.10 of the February 2023 OECD Administrative Guidance provides more information on the treatment of the US Global Intangible Low-Taxed Income (GILTI) regime.
This is to be treated as a blended CFC Regime for GloBE purposes. Under the GloBE Rules CFC taxes are allocated to the foreign CFC (subject to the push down restriction). The GloBE Commentary doesn’t go into detail on the allocation and just provides that the CFC tax should be allocated to each CFC based on the owner’s share of the underlying income.
However, determining the allocation can be tricky when there is a blended CFC regime.
The December 2023 OECD Administrative Guidance provides additional information on the application of the Blended CFC rules, including:
– where an MNE Group calculates multiple GloBE Jurisdictional ETRs for different types of Entities located in the same jurisdiction (eg a separate GloBE ETR for investment entities or JVs),
– where an MNE Group is not required to calculate an ETR as they claim the Transitional CbCR Safe Harbour or the QDMTT Safe Harbour, or if the De Minimis exclusion applies
– where a Constituent Entity is subject to a Blended CFC Tax Regime on the income of non-GloBE Entities.
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On November 12, 2024, the Vietnamese Ministry of Finance issued a Draft Decree for the Implementation of the GloBE Rules. This is subject to a consultation until December 6, 2024 and it includes provisions for the detailed operation of the GloBE rules in Vietnam.
The September 17, 2024 draft law to amend the Minimum Tax Act was amended on October 3, 2024. Read our updated GloBE Guide.
On November 7, 2024, the UK issued Finance Bill 2024-2025 which includes a number of amendments to provide for the December 2023 and June 2024 OECD Administrative Guidance. Read our updated GloBE Guide.
On October 30, 2024 the Global Minimum Tax Bill and the Global Minimum Tax Administration Bill were sent to the National Assembly. Read our updated Country Guide.
On November 7, 2024, the Finance Bill 2024-2025 was introduced to Parliament. This includes provisions to enact the UTPR (and associated rules such as the Transitional UTPR Safe Harbour and Initial Phase of International Activity Exemption), and other Pillar 2 amendments.
On October 31, 2024 additional amendments were made to the 2024 draft amendment law to incorporate aspects of the OECD June 2024 Administrative Guidance.
On October 29, 2024, Hungary issued its Autumn Tax Package proposal. This included minor changes to the Pillar Two law. Most notably it expanded on the registration requirements.
We keep track of the domestic implementation of the Subject-to-Tax Rule (STTR) internationally including links to relevant effected double tax treaties.
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 for both general GloBE and QDMTT purposes.
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