🌍 This week’s issue of Tax Notes International features an article written by our founder Lucas de Lima Carvalho about the alleged similarity between the OECD – OCDE Pillar 2 Income Inclusion Rule (IIR) and Controlled Foreign Company (CFC) rules known and applied in many countries. As said by the author:
“[T]he statement found in the OECD Pillar 2 blueprint that ‘the IIR operates in a way that is similar to a CFC rule’ is false. As I described in this article, the two types of rules operate in different ways: CFC rules allocate income to a controlling entity whereas the IIR allocates tax charges to any number of parent entities (some of which might not necessarily be in control of the entities that originally earned the GLOBE income subject to the IIR). CFC rules combat tax avoidance, the IIR mitigates tax competition. Strong or weak, the argument one uses to justify the adherence of CFC rules to tax treaties is not the argument one would have to use to defend the IIR, and it is probably the case that courts that issued precedents against the former will be even more inclined to rule against the latter.”
The article is available (through a paywall) here: https://lnkd.in/dBeVc76D
If you are interested in the topic of the interplay between domestic law and/or tax treaties and the Pillar 2 IIR, read our list of recommended articles below:
➡ “CFCs and Tax Treaties: Historical Elements for the IIR Debate”, by Pedro Guilherme Lindenberg Schoueri and Ricardo André Galendi Júnior, published by Wolters Kluwer Intertax. Available (through a paywall) here: https://lnkd.in/d7-8Mn3D
➡ “As Regras Recomendadas pelo Pillar Two e a sua Relação com o Ordenamento Jurídico Brasileiro” (The Rules Recommended by Pillar Two and their relationship with the Brazilian Legal System), by Leonardo Aguirra de Andrade, published by IBDT – Instituto Brasileiro de Direito Tributário. Available (in Portuguese) here: https://lnkd.in/dWwB74hJ
➡ “Why Pillar Two Top-Up Taxation Requires Tax Treaty Modification”, by Maarten Floris de Wilde, published by Wolters Kluwer International Tax Blog. Available here: https://lnkd.in/dTRC_bPc
