Tag: Two Pillar Solution
OECD releases lists of qualifying and covered jurisdictions under Amount B
On 17 June 2024, additional guidance and lists of qualifying and coverred jurisdictions under Amount B was released by the OECD. The additional guidance includes: The definitions of qualifying jurisdictions within the meaning of section 5.2 and 5.3 of the Amount B guidance. These definitions will facilitate adjustments to the return calculated under the simplified and streamlined approach for tested parties located in those qualifying jurisdictions. The respective definitions are now incorporated into the Amount B guidance in the annex to Chapter IV of the OECD Transfer Pricing Guidelines. The definition of covered jurisdictions within scope of the political commitment on Amount B. That political commitment recognises that subject to their domestic legislation and administrative practices, members of the Inclusive Framework commit to respect the outcome determined under the simplified and streamlined approach to in-scope transactions where such an approach is applied by a covered jurisdiction and to take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach by a covered jurisdiction where there is a bilateral tax treaty in effect between the relevant jurisdictions. The approach developed to produce the list of covered jurisdictions facilitates tax certainty for jurisdictions most interested in implementing Amount B from 1 January 2025. Note that an expression of interest in applying Amount B does not necessarily mean that a jurisdiction will proceed to implement it. Further work on the Pillar One package, including the Amount B framework, is still ongoing as indicated in the Statement by the Co-Chairs of the Inclusive Framework on 30 May 2024 ...
OECD releases New Set of Administrative Guidance on GloBE Model Rules
17 June 2024 OECD released a fourth set of Administrative Guidance on the Global AntiBase Erosion Model Rules (Pillar Two), in order to further clarify technical issues under the GloBE Rules. The Administrative Guidance will eventually be incorporated into the Commentary to the GloBE Model Rules. Administrative Guidance on the GloBE rules has also previously been release in July 2023, December 2023, and February 2024 ...
OECD releases text of the new MLC to Implement Amount A of Pillar One
11 October 2023 the OECD/G20 Inclusive Framework has released the text of a new multilateral convention that updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes. The Multilateral Convention to Implement Amount A of Pillar One (the MLC) reflects the current consensus achieved among members of the Inclusive Framework. Amount A of Pillar One co-ordinates a reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable multinational enterprises (MNEs) operating in their markets, regardless of their physical presence. It also ensures the repeal and prevents the proliferation of digital services taxes and relevant similar measures, secures mechanisms to avoid double taxation, and enhances stability and certainty in the international tax system. Accompanied by an Explanatory Statement and the Understanding on the Application of Certainty of Amount A, the MLC provides for a co-ordinated system of taxation and sets out the substantive features necessary for it to be prepared for signature, including its scope and operation. The MLC also includes several provisions designed to address the unique circumstances of developing Inclusive Framework members ...
Germany publishes draft legislation to implement the global minimum tax – OECD Pillar II
The German Federal Ministry of Finance issues draft law for the implementation of the EU Directive to ensure a global minimum level of taxation for multinational groups of companies and large domestic groups in the Union The aim of the draft law is to implement key elements of the international agreements on Pillar 2 of the so-called two-pillar solution. The post-taxation provisions contained therein are intended to ensure a global effective minimum taxation, to counteract harmful tax competition and aggressive tax structuring and thus to contribute to the promotion of tax justice and a level playing field. Click here for unofficial English translation ...
OECD Publishes Consultation Document on Amount B
On 9 December 2022 OECD published a consultation document on Amount B as part of the ongoing work on OECD’s two-pillar solution to address the tax challenges arising from the digitalisation of the economy. Amount B is one of the components of Pillar One and aims to simplify and streamline application of the arm’s length principle in regards to in-country baseline marketing and distribution activities. A particular concern of low capacity jurisdictions has been the relative unavailability of appropriate local market comparables through which arm’s length prices can be established. Amount B will address this issue by providing a basis to establish an arm’s length price in all cases using suitable comparables, wherever they are geographically drawn from. The consultation document outlines the main design elements of Amount B – scope, pricing methodology and the current status of discussions concerning an appropriate implementation framework. Deadline for submission of comments is 25 January 2023 ...