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Profit recognition under GloBE and domestic rules: it’s all in the timing

Speed read
The OECD published model minimum tax rules on 20 December 2021. An interesting aspect – which has evolved since previous iterations – is the approach to adjusting for differences between when profits are recognised under the GloBE and domestic rules. The rules now smooth out such differences by allowing businesses to include deferred tax expenses when calculating their effective tax rate. This addresses business concerns but makes the rules more complex. There are also limits on when deferred tax may be taken into account, which may lead to unexpected GloBE charges in some situations, especially those involving intangibles.

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