On 20 December 2021 the OECD / G20 Inclusive Framework on BEPS released Model GloBE Rules under Pillar Two. On 22 December 2021 the European Commission published a proposed EU directive to incorporate Pillar Two into EU law. The GloBE Rules aim to impose a global minimum tax of 15% on MNEs with a revenue in excess of EUR 750 million or more. The rules are due to be brought into law in 2022, to be effective in 2023 for the Income Inclusion Rule (IIR), and 2024 for the Undertaxed Payment Rule (UTPR).
Three shots at achieving global minimum tax rate
Qualified domestic tax
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Possibility for jurisdictions to introduce a domestic minimum taxation, which if qualified, reduces the jurisdictional Top-up Tax
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If a positive Top-up Tax remains, IIR to apply
Income Inclusion Rule (IIR)
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Imposes Top-up Tax on a parent entity in respect of low-taxed jurisdictions within an MNE group
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Considered the “main rule” within the overall Pillar Two rule set
Undertaxed Payments Rule (UTPR)
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“Back-stop” or “secondary rule” to the IIR
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Denies tax deductions, or requires an equivalent adjustment, to the extent low tax income is not already subject to an IIR
Determine the impact
Our expert team can help you assess the possible impact of the GloBE Rules using the following step plan:
Step 1: Identify Constituent Entities in scope
Step 2: Determine GLoBE Income
Step 3: Identify and Allocate Covered Taxes
Step 4: Calculate Effective Tax Rate and Top-up Tax
Step 5: Impose Top-up Tax under IIR or UTPR
Pillar Two - Maritime Industry
The GloBe rules have a specific impact on the Maritime Industry. Our specialists provide insights into experts view on the impact of Pillar Two on the Maritime Industry. Let us help you identify the impact of the new rules on your current maritime business model and legal structure and assist you in establishing whether the shipping exclusion applies to your current set-up.
