Evolution of the overall minimum tax (pillar 2) – Tax authorities


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March was a particularly interesting month of developments on the Pillar Two front. Below is a summary of the main ones.

On March 7, 2022, KPMG submitted his answer to the European Commission’s call for a public consultation on the subject.

On March 12, 2022, the compromise text of the proposal for a directive to incorporate the OECD second pillar tax rules into EU law has been published. The compromise text revises the initial proposal for a directive of December 22, 2021 which aims to ensure an overall minimum level of taxation (at 15%) for multinational groups in the EU whose turnover exceeds 750 million euros . Among other things, the compromise text provides for amendments that refer to the ongoing work of the OECD and corrects discrepancies between the OECD Model Rules (also known as the “GloBe Rules”), which were first published on December 20, 2021, and the initial text of the directive. In addition, the new text extends the transposition deadline until 31 December 2023 and offers Member States the possibility to postpone the application of the income inclusion rule (IIR) and the undertaxed profit rule ( UTPR), where no more than 10 ultimate parent entities of the MNE groups in scope are located in those Member States. You can refer to this Euro Tax Flash from the KPMG European Tax Center for a non-exhaustive overview of the main amendments that the compromise text provides for compared to the initial version of the Directive.

On March 15, 2022, the Economic and Financial Affairs Council (ECOFIN) failed to reach a political agreement on the compromise text of an EU directive on minimum taxation. Due to objections from four Member States, including Malta, further discussions are needed in order to reach an agreement.

Meanwhile, on March 14, 2022, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), involving over 140 countries, including Malta, published a comment on the GloBE model rules. In addition to the March commentary of 228 pages, a document containing 24 examples and 49 pages has been published to supplement the commentary. The model, commentary and examples provide the framework for the 15% minimum tax across the world.

Alongside the publication of the commentary, the OECD has opened a public consultation on the administrative and compliance aspects of the GloBE rules, including potential conditions for any simplifications and the use of safe harbors. Written comments are expected no later than April 11, 2022.

Lily Updated global analysis from KPMG Pillar 2 Model Rules Commentary and Examples and Top 20 Questions and Answers on the New GloBE Model Rules Commentary.

Originally published March 29, 2022

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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