🌎 The OECD – OCDE has just published the Consolidated Commentary to the Global Anti-Base Erosion (GloBE) Model Rules of Pillar Two. The document has over 300 pages and aggregates administrative guidelines that were published about Pillar Two since the publication of the GloBE Model Rules in December of 2021.
Several countries have already adopted (some form of) GloBE rules in their legal systems, and the challenge of non-adopters is that GloBE rules operate in a manner that renders their opposition relatively fruitless. Still, multinational groups are structured in different ways and operate in different countries, so it is far from settled that all those groups (if in-scope, with revenues above the threshold of EUR 750 million per year) will be subject to taxes along the lines of Pillar Two. Legal challenges against Pillar Two rules, whether based on tax treaties or constitutional law, are yet to be presented to local courts – and their rulings might vary, which then again breeds opportunities for forum shopping.
In addition to this, the United Nations are now committed to taking over the role of global tax policymaker for the benefit of developing countries. Whether Pillar Two as it exists today will coexist harmoniously with the new UN mandate and whether the UN will deliver on the mandate it has received from its members are still open questions.
The full OECD Consolidated Commentary on Pillar Two is available here (https://bit.ly/49PSK0x). If you are interested in reading about core elements of Pillar Two, here are a few recommended articles:
✅ “Revisiting the Similarity Between CFC Rules and the IIR”, by Lucas de Lima Carvalho. Published by Tax Notes on January 29, 2024. Available at: https://bit.ly/3UdOoL0
✅ “The OECD Tax Deal and Developing Countries: Where Do We Stand?”, by Leopoldo Parada. Available on SSRN as of August 8th, 2023. Available at: https://bit.ly/3waExxr
✅ “The Belated Pillar 2 Subject-to-Tax Rule, Parts 1, 2 and 3”, series of articles by Lucas de Lima Carvalho. Published by Tax Notes between September and November of 2023. Available at: https://bit.ly/4b1pGEq / https://bit.ly/3xPZEWh / https://bit.ly/4dcGHx8
✅ “Some Considerations on the Limitation of Substance-Based Carve-Out in the Income Inclusion Rule of Pillar Two”, by LuÃs Eduardo Schoueri. Published by IBFD on November 25, 2021. Available at: https://bit.ly/49UCifE
✅ “El Pilar Dos: objetividad, pragmatismo y revolución”, by Ciro Meza. Published by ICDT Instituto Colombiano de Derecho Tributario in June of 2021. Available at: https://bit.ly/3Ugnt0V (in Spanish)
✅ “The Treatment of Tax Incentives under Pillar Two”, by Belisa Ferreira Liotti, Joy Ndubai, Ruth Wamuyu, Ivan Lazarov and Jeffrey Owens. Published by UNCTAD in 2022. Available on SSRN: https://bit.ly/4b865Cw
✅ “UTPR: Unprecedented (and Unprincipled?) Tax Policy Response”, by Angelo Nikolakakis and Jinyan Li. Published by Tax Notes on February 6th, 2023. Available at: https://bit.ly/3xRF1Jr
