The OECD’s pillar two GloBE top-up tax proposals are aimed at ensuring large multinationals pay a minimum effective tax rate of 15% on all of their profits. While these rules will most obviously have an impact on groups operating in countries with low corporate income tax rates, they may also be engaged where a group’s tax liabilities are reduced because it benefits from tax reliefs. Consequently, some governments have signalled their intention not only to implement a domestic minimum tax in order to collect any top-up tax in-country, but also to reconsider the design of their incentives which reduce GloBE ETR. Countries wishing to maintain their tax competitive standing may look to achieve this through means which do not affect GloBE ETR, such as by providing refundable tax credits or subsidies for specific types of expenditure.
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The OECD’s pillar two GloBE top-up tax proposals are aimed at ensuring large multinationals pay a minimum effective tax rate of 15% on all of their profits. While these rules will most obviously have an impact on groups operating in countries with low corporate income tax rates, they may also be engaged where a group’s tax liabilities are reduced because it benefits from tax reliefs. Consequently, some governments have signalled their intention not only to implement a domestic minimum tax in order to collect any top-up tax in-country, but also to reconsider the design of their incentives which reduce GloBE ETR. Countries wishing to maintain their tax competitive standing may look to achieve this through means which do not affect GloBE ETR, such as by providing refundable tax credits or subsidies for specific types of expenditure.
If you are not a subscriber, subscribe now to read this content.
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