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International Tax Reform: The OECD/G20 Inclusive Framework Issues Updated Details Regarding Crucial Elements Of The Two-Pillar Solution

Muammar

IBX-Jakarta. The recently issued Agreed Administrative Guidance for the Pillar Two GloBE Rules (December 2023) provides additional explanations to the Global Anti-Base Erosion Model Rules, aiming to clarify their implementation. This guidance includes specifics on applying the Transitional Country-by-Country Reporting Safe Harbour and a method for distributing taxes from a Blended Controlled Foreign Corporation (CFC) Tax Regime when certain jurisdictions where the multinational enterprise (MNE) operates qualify for the safe harbour.
Moreover, the Inclusive Framework plans to continually release more Agreed Administrative Guidance to address inquiries from stakeholders seeking clarification on various aspects of the GloBE Rules. Additionally, they will address cases of aggressive tax planning that could potentially undermine the rules’ integrity or their application to specific MNE Groups. The Framework also intends to streamline key compliance procedures, with anticipated guidance in the first half of 2024 regarding deferred tax liability recapture rules and the allocation of deferred taxes related to cross-border taxes like CFC Tax Regimes. Furthermore, they aim to institute a thorough and transparent peer review process and further develop administrative frameworks and dispute resolution mechanisms to offer stakeholders a higher level of tax certainty when implementing these rules.
In addition to this, the Inclusive Framework released an updated statement today outlining the revised timeline for finalizing the text of the MLC (Multilateral Convention). The MLC aims to execute the coordinated redistribution of taxing rights over the profits of the world’s largest and most profitable companies (Amount A of Pillar One). The statement underscores the strong commitment of Inclusive Framework delegates to resolve outstanding issues, achieve a consensus-based solution, and swiftly conclude the MLC’s text.
Source: International tax reform: OECD/G20 Inclusive Framework releases new information on key aspects of the Two-Pillar Solution – OECD
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