The Organization for Economic Co-operation and Development (OECD) has shared comments it received from stakeholders on the regulated financial services exclusion under Amount A of its Pillar One draft model rules. The OECD received these comments through its public consultation on this exclusion, which closed on May 20, 2022.

In a submission to the OECD, KPMG highlights five key issues with the regulated financial services exclusion under Amount A. KPMG makes recommendations to:

  • Exclude a broad range of financial services from the scope of Amount A and specifically exclude banking, insurance (including reinsurance) and asset management to prevent unintended outcomes
  • Consider excluding certain businesses that compete with businesses that are covered by the Regulated Financial Services Exclusion, such as payment services providers to ensure a level playing field
  • Remove the activities requirement to simplify the entity-based approach and ease significant compliance burdens on taxpayers and tax administrations
  • Ensure that multinational enterprise (MNE) groups that are partially in scope are not at a disadvantage, where the Amount A rules apply
  • Simplify the administration of the Regulated Financial Services Exclusion by:
    • Giving MNEs that are not in-scope of Amount A because of the exclusion the option to file a return, rather than require them to file a return
    • Considering a rulings process where a taxpayer that files a return could receive certainty that they are not in-scope of Amount A for at least 5 years, under certain conditions.

For more information, see KPMG International's submission or contact your KPMG adviser.

Information is current to May 30, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500