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.
It’s often said there are two key tax incentives under the GloBE rules that don’t impact on the GloBE ETR:
– Qualified Refundable Tax Credits;
– Tax incentives that qualify as timing differences