![]() The current project, referred to as BEPS 2.0, is being conducted through the OECD/G20 Inclusive Framework, which now has 141 participating jurisdictions. Backgroundīuilding on its earlier work on BEPS that culminated in the issuance in 2015 of final reports on 15 action areas, the OECD in 2019 began a new project focused on addressing the tax challenges of the digitalization of the economy. It is expected that the Model Rules will be reflected in the proposed Directive with some modifications in light of EU law requirements. On 22 December, the European Commission is expected to publish a proposal for a European Union (EU) Directive to require implementation of the GloBE rules across all EU Member States. Finally, the OECD notes the work to be done on development of an implementation framework addressing administration, compliance and coordination matters related to Pillar Two and announces that a public consultation event on the implementation framework will be held in February 2022. In addition, the Inclusive Framework is developing the model treaty provision for the Subject to Tax Rule (STTR), which is the third element of the Pillar Two global minimum tax framework, and a multilateral instrument for its implementation, which the OECD expects to release in the early part of 2022 with a public consultation event on it to be held in March 2022. The OECD press release indicates that it expects to release the Commentary relating to the Model Rules and to address the interaction with the United States (US) Global Intangible Low-Taxed Income (GILTI) rules in early 2022. Inclusive Framework members are also required to accept the application of the GloBE rules by other Inclusive Framework members. The GloBE rules are designed as a common approach, which means that Inclusive Framework members are not required to adopt the GloBE rules but if they choose to do so, they should implement and administer the rules in a way that is consistent with the Model Rules. Together with the Model Rules, the OECD also released a summary of the rules ( The Pillar Two Model Rules in a Nutshell (pdf)), an overview of the key operating provisions of the GloBE rules ( Fact Sheets (pdf)) and a Frequently Asked Questions (pdf) document.Īccording to the timeline released in October with agreement of member jurisdictions of the Inclusive Framework, the Pillar Two rules should be brought into domestic law in 2022 to be effective in 2023, with the exception of the UTPR which is to enter into effect in 2024. The Model Rules define the scope and key mechanics for the Pillar Two system of global minimum tax rules, which includes the Income Inclusion Rule (IIR) and the Under Taxed Payments Rule (UTPR), referred to collectively as the “GloBE rules.” ![]() On 20 December 2021, the Organisation for Economic Co-operation and Development (OECD) released the Pillar Two Model Rules (pdf) as approved by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
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