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OECD releases Pillar Two Administrative Guidance
On 2 February 2023, the OECD/G20 Inclusive Framework on BEPS (inclusive framework) released a package of technical and administrative guidance (“administrative guidance”) related to the 15% global minimum tax on multinational corporations known as Pillar Two (or the global anti-base erosion (“GloBE”) rules). The guidance was agreed by consensus of all 142 countries and jurisdictions in the OECD/G20 inclusive framework and forms part of the “common approach.” Under the common approach, countries are not required to adopt the GloBE rules but, if they choose to do so, they agree to implement and administer the rules in a way that is consistent with the outcomes provided for under the Pillar Two model rules and any subsequent guidance agreed by the inclusive framework.
Deloitte Finance Day 2023 - The colours of finance - design your future capability - 1 June 2023 in Zurich
Higher attention to Country-by-Country Reporting going forward
Recent developments, such as the acceleration of the public Country-by-Country Reporting (“CbCR”) obligations by Romania, as well the newly published guidance regarding Pillar II safe harbour rules, have put increasing pressure and scrutiny on Multinational Enterprises’ (“MNEs”) CbCR obligations and will directly affect companies’ tax compliance obligations.
Join our OECD Pillar II webinar on 15 February 2023, 4.00pm
The implementation of the Global Minimum Tax (“OECD Pillar II”) experienced a significant push towards reality in late December 2022, which included:
- The European Union adopting the directive requiring members to transpose it into domestic legislation
- Switzerland completing the parliamentary process on its change of constitution
- The OECD`s publishing a number of papers to guide the GloBE implementation (in particular: safe harbours, information return and tax certainty)
To navigate these developments we are organising a keynote webinar on Wednesday 15, February 2023 from 4.00 to 5.30pm to discuss these and other topics.
South Korea: First Country to pass the domestic Global Minimum Tax legislation
On 23 December 2022, the Korean National Assembly officially passed the 2022 Tax Revision Bill originally announced by the Ministry of Economy and Finance back in July 2022.
This is a pivotal moment in the advancement of the global minimum tax “Pillar Two” as South Korea is the first country to codify the GloBE Rules into domestic legislation. The newly passed law provides that a global minimum tax will be introduced from fiscal years beginning on or after 1 January 2024.
OECD Pillar Two: Information return and safe harbors published
On 20 December 2022, the OECD published an implementation package in respect of the implementation of the Pillar Two global minimum tax rules (“Pillar Two”). The package includes: guidance on safe harbors; a public consultation document on the GloBE information return (“information return”); and a public consultation document on tax certainty.
This follows the statement on the components of global tax reform, agreed by more than 135 members of the OECD/G20 Inclusive Framework on BEPS (“OECD inclusive framework”) in October 2021, and the publication by the OECD inclusive framework of model rules for Pillar Two in December 2021 and commentary in March 2022.
EU to adopt its “Pillar II” Directive and a clear road to implementation
Looming over taxpayers for most of 2022, the EU-Directive to adopt the global minimum tax in member states has received consent from both Hungary and Poland according to a press release of the EU-Council on 12 December 2022. The formal adoption to finalize the project one year after publication of the initial proposal is expected to take place on 14 December 2022. The EU-Directive expects member states to transpose the directive into domestic law by 31 December 2023. The adoption ends a year-long political back and forth in the EU council and greenlights one of Europe’s most significant overhaul of tax determination of multinational enterprises (“MNE Groups”).
OECD Pillar One – Amount B transfer pricing distribution return
On 8 December 2022, the OECD published a consultation document on the main design elements of ‘Pillar One – Amount B’, outlining a new process for pricing baseline distribution activities in accordance with the arm’s length principle.
Deloitte's Tax practice strengthens its capabilities for financial services, banking and insurance clients with two new key partners
Deloitte Switzerland is delighted to announce that two new partners, Ilan Rom and Petrit Ismajli, will join its Financial Services Tax team on 1 December. This intake marks the continued strategic expansion of Deloitte`s tax-related services and capabilities for clients across the banking, insurance and investment management sectors.
First EU member state issues Pillar II draft legislation
On Monday 24 October 2022 the Netherlands published draft legislation, including commentary, relating to the domestic implementation of the global minimum tax (“Pillar II”). Essentially the draft legislation closely follows the OECD’s Pillar II Model Rules as well as the EU’s Pillar II directive proposal, containing the Income Inclusion Rule (“IIR”), Undertaxed Profits Rule (“UTPR”) and a Qualified Domestic Minimum Top-up Tax (“QDMTT”). It is expected that the IIR and QDMTT will come into effect for in-scope groups that have financial years starting on or after 31 December 2023. The draft legislation is open for public consultation until 5 December 2022.