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One World Tax Regime

Updated: Jul 19, 2023

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OECD Presents International Tax Update to G20 Finance Ministers and Central Bank Governors — Orbitax Tax News & Alerts

The OECD has published the OECD Secretary-General Tax Report that was presented to G20 Finance Ministers and Central Bank Governors during their meeting held on 24 to 25 February 2023 in Bengaluru, India. The report covers several topics, including the two-pillar international tax package, tax and development, the global forum on transparency and exchange of information, tax and crime, BEPS project implementation, and the inclusive forum on carbon mitigation approaches. In regard to the two-pillar international tax package, in particular, the report includes the following: --- Two-Pillar International Tax Package Pillar Two The Global minimum tax is now becoming a reality. In February 2023, the Inclusive Framework concluded the technical guidance on the Implementation Framework in line with the commitments of the Detailed Implementation Plan agreed in October 2021. This is effectively empowering countries to enact the legislation necessary to move forward with the implementation. This new 111-page Administrative Guidance (Guidance) provides tax administrations with detailed guidance on the co-ordinated design of the Global Anti-Base Erosion (GloBE) Rules and provides MNEs with greater certainty as they prepare to apply the GloBE rules from the beginning of 2024. The Guidance includes the recognition of the US minimum tax (also known as Global Intangible Low-Taxed Income (GILTI) taxes) under GloBE, and more general guidance on the scope, operation and transitional elements of the new rules. It also features the design of Qualified Domestic Minimum Top-up Taxes, i.e., domestic taxes that ensures that the excess profits of MNEs operating in that jurisdiction are subject to a minimum tax rate of 15%, which will particularly benefit to developing countries, as it will take pressure off to offer inefficient tax incentives to multinationals to attract investment. Finally, the Guidance responds to stakeholder feedback on technical issues such as the collection of top up tax in a jurisdiction in a period where the jurisdiction has no GloBE income and on the treatment of debt releases and certain tax credit equity structures. The release of the Guidance marks the completion of the remaining technical work on Pillar Two, together with (a) the December 2022 publication of the documentation on Safe Harbours and Penalty Relief and (b) two public consultations carried out on the compliance and tax certainty aspects of the global minimum tax and on the GloBE Information Return. The Inclusive Framework will continue to release further agreed administrative guidance on an ongoing basis, to ensure the GloBE Rules continue to be implemented and applied in a coordinated manner. The Inclusive Framework recognises that the Subject to Tax Rule (STTR) is an integral part of achieving consensus on Pillar Two for developing countries. Work on the STTR and its commentary is well advanced. The Inclusive Framework is continuing its work to reach a compromise on the remaining outstanding issues to enable signature of the STTR multilateral instrument by mid-2023.

Pillar One In December 2022, the Inclusive Framework released the main design elements of Amount B for public consultation and held a public webinar setting out the work undertaken on Amount B since October 2021. Amount B provides for a simplified and streamlined approach to the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. The consultation period closed on 25 January 2023 and the Inclusive Framework is now focused on integrating the over 1 000 pages of input received from 60 commentators into the ongoing technical work. On Amount A, the priority of the Inclusive Framework is working to find agreement on the building blocks to finalise the text of the Multilateral Convention (MLC) in order that it can be opened for signature by mid2023. While some of the building blocks of Amount A are relatively stabilised, several aspects remain the subject to ongoing negotiations among delegates to the Inclusive Framework. Following a year of rolling public consultations throughout 2022, the Inclusive Framework held three consultations since you last met in October 2022, between November 2022 and January 2023 on the following topics:

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