Model rules for global minimum corporate tax - December 2021

Tim Sarson, head of tax policy at KPMG UK, said: “The publication of model rules for the 15% global minimum corporate tax puts paid to any rumours of its derailment. Some had theorised that President Biden’s domestic tax agenda getting delayed had put the OECD’s plans at risk. But this new documentation suggests that international political consensus and confidence in the reforms remains strong.

“The move is a significant step towards realisation for the Pillar 2 changes but businesses will be rightly concerned about the amount of detail they are still waiting for. With little over a year to go until enforcement, and a full implementation framework not due until next year, question marks linger over the administrative burden of compliance.

“The OECD did include one early stocking filler from the UK Treasury’s perspective – as requested it looks as though tax per the accounts, not cash tax, will be used as the starting point for calculating if a business is required to pay top-up tax under the rules. This should simplify compliance for most firms. However, the revenue threshold of 750 million euros is a steep cliff edge and means businesses just below the cut-off need to start thinking about compliance now before their growth might tip them over.”

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