Pillar Two: GILTI & Blended CFC Regimes

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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