OECD releases consolidated commentary on GloBE Model Rules

Previously published commentary and guidance on the interpretation and application of the GloBE Rules has been consolidated into one volume

Previously published commentary and guidance has now been consolidated into one volume

The OECD released the Pillar Two Global Anti-Base Erosion (GloBE) Model Rules in December 2021. Their aim is to ensure large multinational enterprises pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. This is achieved by way of a top-up tax on profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum rate.

Shortly after this, in March 2022, the OECD also issued a commentary to the rules (the ‘Commentary’) and a set of illustrative examples (the ‘Examples’).

As groups and tax authorities have been working through the rules (and legislation has been enacted) a number of issues have been identified and queries raised with the OECD. To date, these have been dealt with through issuing Agreed Administrative Guidance (of which three sets have been issued in February 2023, July 2023 and December 2023) (the ‘Guidance’). Further guidance is expected in 2024.

In order to consolidate the Commentary and the Guidance to date, on 25 April 2024, the OECD released a consolidated Commentary that incorporates the March 2022 commentary to the Model Rules with the Guidance. This is, in effect, a consolidation of existing texts into a single volume rather than the publication of new commentary.

The OECD has also updated the Examples, to take account of the Guidance. These examples do not form an integral part of the Commentary and are intended to be used for illustrative purposes only.