International: Fourth Set of Administrative Guidance for Pillar Two: More Guidance, More Complexity

26 Jun 2024    1 minute read
Pillar Two Administrative Guidance Tax Featured Content

In brief

On 17 June 2024, the OECD/G20 Inclusive Framework on BEPS ("Inclusive Framework") released a fourth tranche of technical guidance (the "June 2024 Guidance") on the implementation of the Global anti-Base Erosion Model Rules ("GloBE Rules"), which were originally approved and released by the Inclusive Framework on 20 December 2021. The June 2024 Guidance addresses the recapture of deferred tax liabilities ("DTLs"), deferred tax considerations relating to differences in GloBE and accounting carrying values, the allocation of current and deferred taxes to PEs and CFCs, the allocation of profits and taxes in certain hybrid situations, and the proper treatment of securitization vehicles.

Contents

The Inclusive Framework members have agreed that jurisdictions that implement the GloBE Rules will "subject to any requirements of domestic law, apply the GloBE Rules in accordance with any Agreed Administrative Guidance." See GloBE Rules, Article 8.3.1. The stated objective of the administrative guidance that the Inclusive Framework releases is to "ensure consistent and common interpretation of the GloBE Rules, provide certainty for MNE Groups and facilitate coordinated and transparent outcomes under the rules." See June 2024 Guidance, Executive Summary, para 4.

Before issuing the June 2024 Guidance, the Inclusive Framework had already released three tranches of guidance in February, July, and December of 2023.

Also on 17 June 2024, the Inclusive Framework released a concise Question & Answer document outlining plans for peer review to assess the qualified status of an implementing jurisdiction's Income Inclusion Rule ("IIR"), Undertaxed Profits Rule ("UTPR"), and Qualified Domestic Minimum Top-up Tax ("QDMTT"), as well as determine the jurisdiction's eligibility for the QDMTT Safe Harbor.

We summarize the key points in the June 2024 Guidance and peer review Q&A below.

Click here to read the full alert.

Contact Information
Mounia Benabdallah
Partner at BakerMcKenzie
New York
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mounia.benabdallah@bakermckenzie.com
Ethan Kroll
Partner
Los Angeles
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ethan.kroll@bakermckenzie.com
Miles Humphrey
Principal Tax Advisor at BakerMcKenzie
New York
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miles.humphrey@bakermckenzie.com
Cara Harrison
Principal TaxAdvisor at BakerMcKenzie
Chicago
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cara.harrison@bakermckenzie.com
David Schultz
Associate
Sydney
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david.schultz@bakermckenzie.com

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