The December 2022 Safe Harbour and Penalty Relief Guidance provided for a Simplified Calculations Safe Harbour. The aim being to reduce or simplify the number of computations and adjustments an MNE is required to make under the GloBE Rules.
The only simplified calculations that have currently been developed by the OECD are the Non-Material Constituent Entity (NMCE) Simplified Calculations.
A number of jurisdictions already include the Simplified Calculations Safe Harbour in their GloBE legislation (see our Pillar Two GloBE Guides), including:
– Austria
– Bulgaria
– Germany
– Ireland
– Luxembourg
– Romania
– UK
The December 2023 OECD Administrative Guidance provides further information on the NMCE Simplified Calculations (for the Simplified Calculations Safe Harbour).
NMCEs are constituent entities of an MNE Group that are not consolidated on a line-by-line basis in the MNE Group’s audited consolidated financial statements solely for size or materiality grounds. It also includes any permanent establishments of these entities (providing the Main Entity is itself an NMCE.)
It should be noted that an entity will only be considered a NMCE if an external auditor has agreed that the entity does not meet the materiality standards and has been excluded from the consolidation process on those grounds.
Where an entity’s revenue exceeds EUR 50 million, the entity will only be an NMCE if its financial accounts are prepared in accordance with an Acceptable Financial Accounting Standard or an Authorised Financial Accounting Standard.
Given the significant practical difficulties MNEs may have in obtaining accurate reporting figures for NMCEs (as they aren’t included in the consolidated accounts), NMCEs can benefit from the following simplifications:
– The GloBE revenue and GloBE income of an NMCE is the total revenue of the NMCE as determined in accordance with the relevant CbC regulations.
– The adjusted covered tax of a NMCE is the income tax accrued as determined in accordance with the relevant CbC regulations (note that this excludes any deferred tax expenses, adjustments for non-current items and provisions for uncertain tax liabilities).
Relevant CbC Regulations are the Country-by-Country Reporting Regulations of the UPE Jurisdiction or of the surrogate parent entity jurisdiction if a Country-by-Country Report is not filed in the UPE Jurisdiction.
If the UPE jurisdiction does not have CbC requirements and an MNE Group is not required to file a CbC Report in any jurisdiction, Relevant CbC
Regulations are the OECD BEPS Action 13 Final Report and the OECD Guidance on the Implementation of Country-by-Country Reporting.
These simplified figures are then used for three tests under the Simplified Calculations Safe Harbour.
On December 23, 2024, Australia issued the Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024 (the ‘Rules’) to provide for the detailed application of the Pillar 2 GloBE rules in Australia.
On January 15, 2025, the OECD issued Administrative Guidance that includes a list of jurisdictions that have transitional qualified status for the purposes of the income inclusion rule and domestic minimum tax (including the QDMTT Safe Harbour).
On January 15, 2025, the OECD issued an updated GloBE Information Return (GIR) and GIR XML Schema. In this article we look at the changes to the previous GIR.
On January 3, 2025 the Law on Global Minimum Corporate Income Tax was published in the Official Gazette to implement the EU Global Minimum Tax Directive.
On January 15, 2025, the OECD issued a list of jurisdictions that have transitional qualified status, further Administrative Guidance on the application of the Article 9.1 transitional rules, and an updated GloBE Information Return and GIR XML Schema, as well as the GIR MCAA.
On December 31, 2024, Law No. 20612, was published to amend the International Tax Adjustment Act for the 2025 Tax Reform provisions. This includes some amendments to the Global Minimum Tax provisions.
On December 31, 2024, Ministerial Decree of December 27, 2024 was published in the Official Gazette. This implements Article 4.1-4.3 of the February 2023 OECD Administrative Guidance and some aspects of the June 2024 OECD Administrative Guidance on deferred taxation.
The Ministerial Decree of December 27, 2024 published in the Official Gazette on December 31, 2024 provides for a number of miscellaneous, but important aspects of the OECD Administrative Guidance that were not included in the original Minimum Tax Law.
The Dutch Minimum Tax Executive Decree 2024 was published in the Government Gazette on December 23, 2024 to implement various aspects of the OECD Administrative Guidance.
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