OECD: Commentary on Pillar Two model rules for domestic implementation of 15% global minimum tax

The 15% minimum tax will apply to multinational enterprises (MNEs) with revenue above €750 million.

Domestic implementation of 15% global minimum tax

The Organisation for Economic Cooperation and Development (OECD) today published commentary on the Pillar Two model rules which were released 20 December 2021 and provide a precise template for governments to move forward with Pillar Two of the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy.

The model rules define the scope and set out the mechanism for the “global anti-base erosion” (GloBE) rules under Pillar Two, which will introduce a global minimum corporate tax rate set at 15%, effective from 2023. Read TaxNewsFlash

The 15% minimum tax will apply to multinational enterprises (MNEs) with revenue above €750 million and is estimated to generate around U.S. $150 billion in additional global tax revenues annually.

The model rules will assist countries to bring the GloBE rules into domestic legislation in 2022, and address, in particular:

  • Treatment of acquisitions and disposals of group members
  • Rules to deal with particular holding structures and tax neutrality regimes
  • Administrative aspects, including information filing requirements
  • Transitional rules for MNEs that become subject to the global minimum tax

According to today’s OECD release, the commentary provides MNEs and tax administrations with detailed and comprehensive technical guidance on the operation and intended outcomes under the GloBE rules and clarifies the meaning of certain terms. The commentary also illustrates the application of the GloBE rules to various fact patterns. The commentary is intended to promote a consistent and common interpretation of the GloBE rules that will facilitate co-ordinated outcomes for both tax administrations and MNE groups.

What’s next?

The OECD next plans to develop an implementation framework to support tax authorities in the implementation and administration of the GloBE rules. As the first step in this process, the OECD will undertake a public consultation regarding the implementation framework, with comments invited no later than 11 April 2022.


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