7/6/2023 0 Comments Timelime on bepsMost recently, on 20 December 2021, the OECD released the Model Rules, 8 which are intended to provide guidance to countries for use in incorporating Pillar Two global minimum tax rules into their domestic tax legislation. In October 2021, the OECD published a statement 7 on the final political agreement on the two pillars, which includes an implementation timeline that contemplates implementation of the new rules largely with effect from 2023. 5 This was followed in July 2021 with the release of a high-level statement reflecting agreement of members of the OECD/G20 Inclusive Framework on key parameters with respect to the two pillars. Since then, the OECD has released a series of documents on the development of the two pillars, culminating with the release in October 2020 of detailed Blueprints on both Pillar One and Pillar Two. The OECD issued a consultation document 3 on the project in February 2019 and hosted an initial public consultation 4 in March 2019. 2 The project is being conducted through the OECD/G20 Inclusive Framework. In January 2019, the OECD began the current project with the release of a Policy Note describing two pillars of work: Pillar One addressing the challenges of the digitalization of the economy and the allocation of taxing rights to market jurisdictions and Pillar Two addressing remaining concerns about potential BEPS activity and tax rate competition among countries. The Inclusive Framework members are seeking public input on the issues that should be addressed as part of this work. On the same date, the OECD also announced a public consultation in connection with the work to be done next to develop the GloBE Implementation Framework addressing administration, compliance and coordination matters related to Pillar Two (the public consultation). In addition, the Commentary identifies various matters throughout the Model Rules where consideration is being given to developing further guidance that would become part of the GloBE Implementation Framework. Together with the Commentary, the OECD also published a separate document with illustrative examples of the application of the Model Rules (the Examples document (pdf)). It also illustrates the application of the rules to various fact patterns. The Commentary provides detailed technical guidance on the operation and intended outcomes of the Model Rules and clarifies the meaning of certain terms. The Commentary references the role of the Model Rules and the Commentary in the context of the GloBE rules’ status as a Common Approach, noting the need for consistency in the implementation and administration of the rules to avoid the risk of double or over-taxation. The Pillar Two Model Rules, 1 released on 20 December 2021, define the scope and key mechanics for the Pillar Two system of global minimum tax rules, which includes the Income Inclusion Rule (IIR) and the Under Taxed Payments Rule (UTPR), referred to collectively as the “GloBE rules.” On 14 March 2022, the Organisation for Economic Co-operation and Development (OECD) released the Commentary to the Pillar Two Model Rules (the Commentary (pdf)) as agreed by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
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