KPMG report: Pillar Two implications for “U.S. sandwich structures”

Why U.S. MNEs need to review their org chart to identify U.S. sandwich entities held through foreign entities

KPMG report

As a result of acquisitions, tax planning, or other anomalies, many U.S.-based multinational enterprises (MNEs) may have a “U.S. sandwich structure” in their org chart in which a U.S.-parented group holds a lower-tier U.S. entity or branch through one or more foreign intermediate entities (including a foreign partnership or disregarded entity). Even if the lower-tier U.S. entity or branch is insignificant or dormant, if the foreign intermediate entity is in a jurisdiction with a Pillar Two income inclusion rule (IIR) in effect for 2024, significant additional top-up tax exposure and compliance costs could result.

Read a November 2023 report* [PDF 206 KB] prepared by professionals from KPMG LLP that explains why U.S. MNEs need to review their org chart to identify U.S. sandwich entities held through foreign entities located in jurisdictions that will have an IIR in effect in 2024.

* This article originally appeared in Tax Management International Journal (21 November 2023) and is provided with permission.



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