Global Minimum Tax
Hot Topic | May 2023
We address accounting questions related to the new GloBE rules.
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Implementing the new GloBE rules and accounting for the top-up tax is proving to be a challenge and stakeholders have raised questions, including whether the top-up tax is within the scope of the income tax accounting standards under US GAAP and IFRS® Accounting Standards (ASC 740 and IAS 12, respectively) and the accounting for temporary differences.
Applicability
- Multinational enterprises (MNE) with consolidated group revenue exceeding €750 million in at least two out of the last four years
Key impacts
- The GloBE rules subject large multinational groups to at least the minimum rate of 15% of income arising in each jurisdiction in which they operate. A top-up tax would arise only if a group pays an insufficient amount of income taxes at the jurisdiction level.
- The GloBE top-up tax is in the scope of ASC 740 under US GAAP.
- Under US GAAP, the GloBE top-up tax is accounted for as an alternative minimum tax. Companies should not record GloBE-specific deferred taxes or remeasure existing deferred taxes under local regular income tax systems to the GloBE rate. Instead, they should recognize the incremental effect of the GloBE top-up tax as incurred.
- Under IFRS Accounting Standards, the International Accounting Standards Board amended IAS 12, which provides a temporary mandatory exception from accounting for deferred tax and new required disclosures.
Report contents
- Calculating the top-up tax
- Complexities
- Accounting for the top-up tax
Download the document:
Global Minimum Tax
Download PDFMeet our team
Angie Storm
Chief Accountant, Dept. of Professional Practice, KPMG US
Matt Drucker
Partner, Dept. of Professional Practice, KPMG US
Angie Storm
Chief Accountant, Dept. of Professional Practice, KPMG US
Matt Drucker
Partner, Dept. of Professional Practice, KPMG US