KPMG report: Pillar Two implementation package, initial observations and analysis
Implementation package related to the Pillar Two global anti-base erosion (GloBE) rules
Initial observations and analysis
The OECD/G20 Inclusive Framework on BEPS on 20 December 2022 released an implementation package related to the Pillar Two global anti-base erosion (GloBE) rules, which provide a coordinated system to ensure that multinational enterprises (MNEs) with revenues above €750 million pay at least an effective rate of 15% on the income arising in each of the jurisdictions in which they operate.
The package includes three documents:
- Guidance on safe harbors and penalty relief [PDF 414 KB] designed to minimize the compliance burden associated with undertaking the full GloBE effective tax rate (ETR) calculation in respect of “lower risk jurisdictions” and a transitional penalty relief regime when an MNE has taken “reasonable measures” to correctly apply the GloBE rules
- Public consultation document on the global anti-base erosion (GloBE) information return [PDF 1.1 MB] which seeks public input on the data requirements associated with complying with the GloBE rules, the exchange of the information return, and related issues
- Public consultation document on tax certainty for the GloBE rules [PDF 329 KB] which outlines and seeks public input on various mechanisms, including dispute prevention and resolution, for achieving tax certainty under the GloBE rules
The safe harbors and penalty relief document includes a transitional country-by-country (CbC) reporting safe harbor that has already been agreed by the Inclusive Framework and a framework for the development of a potential permanent safe harbor. Not included in the package is administrative guidance on many outstanding technical issues; such guidance is expected to be issued in the future on a rolling basis, with the first tranche expected in early 2023. Work is also underway on the subject to tax rule and the implementing multilateral instrument.
Read a December 2022 report [PDF 216 KB] prepared by KPMG LLP that provides observations and analysis of the implementation package
In addition, read a report available on the KPMG Global tax policy insights website that compiles in summary form the announcements made by various countries on implementation of the GloBE rules
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