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Further progress on two-pillar solution

December 20, 2022-OECD Paris. A year after the international community reached a landmark agreement on a two-pillar solution to reform the international tax rules to address the tax challenges arising from globalisation and digitalisation, progress continues towards its implementation across both pillars.

Under Pillar One, the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) has agreed to release, as a Secretariat document, a public consultation document on the Draft Multilateral Convention (MLC) Provisions on Digital Services Taxes (DSTs) and other Relevant Similar Measures. The draft MLC provisions reflect the commitments with respect to the removal of all existing DSTs and other relevant similar measures and the standstill of future measures, which are an integral part of achieving Pillar One’s goal of stabilising the international tax architecture. This follows the recent release of the consultation document on Amount B which completes the consultation on all the building blocks of Pillar One.

Under Pillar Two, the Inclusive Framework is releasing an implementation package relating to Pillar Two Global Anti-Base Erosion (GloBE) Rules, which provide a co-ordinated system to ensure that multinational enterprises (MNEs) with revenues above EUR 750 million pay at least a minimum level – at an effective rate of 15% – on the income arising in each of the jurisdictions in which they operate. The implementation package being released consists of the following elements:

  • Guidance on Safe Harbours and Penalty Relief;
  • A public consultation document on the GloBE Information Return; and
  • A public consultation document on Tax Certainty for the GloBE Rules.

The guidance on Safe Harbours and Penalty Relief includes the agreed terms of a Transitional Country-by-Country Reporting Safe Harbour that effectively removes the obligation of calculating the GloBE effective tax rate for an MNE’s operations in lower-risk jurisdictions in the initial years, thereby providing relief to MNEs in respect of their GloBE compliance obligations as they implement the rules. The document also includes the framework for the development of Permanent Safe Harbours as simplified income and tax calculations, as well as a common understanding as to a Transitional Penalty Relief Regime which requires careful consideration for applying penalties or sanctions where an MNE has taken reasonable measures to ensure the correct application of the GloBE Rules.

The public consultation document on the GloBE Information Return seeks input on the amount and type of information that MNE Groups should be expected to collect, retain and/or report for the application of the GloBE Rules and possible simplifications that could be incorporated in the GloBE Information Return as well as the ability of the MNE Group to provide alternative data points.

The public consultation document on Tax Certainty for the GloBE Rules outlines various mechanisms, including dispute prevention and dispute resolution, for achieving tax certainty under the GloBE Rules. The document outlines the expected next steps in connection with the development of these mechanisms and identifies a number of areas where stakeholder input would be valuable.

Going forward, the Inclusive Framework expects to release administrative guidance on the interpretation or administration of the global minimum tax on a rolling basis, with the first package of administrative guidance to be released in early 2023. Work is also proceeding on the finalisation of the subject to tax rule and the related multilateral instrument to assist in its implementation.


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