KPMG report: Administrative guidance on the GloBE rules

Issues of importance to U.S. companies

Issues of importance to U.S. companies

The OECD/G20 Inclusive Framework on BEPS (IF) on 2 February 2023 released Administrative Guidance (AG) related to the Pillar Two global anti-base erosion (GloBE) rules, which provide a coordinated system to ensure that multinational enterprises (MNEs) with revenue above €750 million pay an effective tax rate (ETR) of at least 15% on their adjusted financial statement income arising in each of the jurisdictions in which they operate. Read TaxNewsFlash

The AG adds to the expanding body of guidance that has been approved by the IF on the GloBE rules, which includes the Model Rules (released in December 2021), Commentary (released in March 2022), and Safe Harbors [PDF 459 KB] (released in December 2022). Various other aspects of the GloBE rules are the subject of ongoing work, including work on administration and ways to provide tax certainty regarding the operation and interpretation of the GloBE rules by multiple jurisdictions.

The AG covers 26 items in 111 pages and sets out to clarify or simplify the application of the GloBE rules. Each item of the AG includes revisions to a particular section of the GloBE Commentary. The AG reflects the consensus of all 142 jurisdictions in the IF and is not open to public comment. The released AG is noted to be an initial tranche, focused on priority issues, to be followed by further guidance throughout the year. The OECD also intends to release a revised version of the GloBE Commentary incorporating the changes made by the AG later this year.

Read a February 2023 report [PDF 1.1 MB] prepared by KPMG LLP that provides general observations on the AG, followed by detailed descriptions of the issues of particular importance to U.S.-parented MNEs and other groups with significant U.S. operations. 



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