How The New Rules Will Impact You?
The OECD global tax deal is taking shape and it is only a matter of time before multinational companies worldwide have to pay an effective minimum tax of 15% on their profits. After months of negotiations, the European Union (EU) has unanimously agreed to implement Pillar Two with the EU Directive needing to be imposed into each country's national law by the end of 2023.
The first countries have already adopted global minimum tax rules while many others have submitted draft legislation for parliamentary debate. In contrast, the US has not made much progress in this direction since the Inflation Reduction Act was passed in August 2022. This Act introduced not only a large variety of green tax credits in order to attract international investments, but also introduced a corporate alternative minimum tax rate of 15%. The two global minimum taxes show certain similarities, but also differ substantially in some key aspects, which may result in double taxation or higher taxes unless adjustments are made to either tax system.
The introduction of the new rules will definitely have a significant impact on the taxable income of the world’s multinationals and tax revenues and therefore also on the future investments of in-scope companies. The OECD's administrative guidance aims to clarify lingering details so that governments adopt tax codes in a consistent and coordinated manner to limit compliance costs for companies and the potential for conflicts.
In a world where tax systems are becoming increasingly complex and tax competition is at the forefront, we have taken a significant step forward, simplifying the process for businesses and tax professionals. We are proud to announce the launch of our Global Minimum Tax Monitor, an indispensable tax tool designed to provide comprehensive insights into the global landscape of minimum taxation and Pillar Two global minimum tax rules.
The monitor is a powerful resource that offers an in-depth overview of global minimum taxation and allows users to easily compare implementation measures by country. This cutting-edge tax tool includes detailed comments on the essential aspects of the Global Anti-Base Erosion (GloBE) rules, domestic minimum top-up taxes and the Subject to Tax Rule . It highlights any deviations from the OECD Pillar Two Model Rules and the respective EU Directive 2022/2523 of 14 December 2022.