Mark Bevington (ADE Tax) highlights the ‘traps’ on the operation of the pillar two model rules which might generate a tax charge when none was expected.
The concept behind pillar two is a simple one: it seeks to ensure that countries cannot levy corporate income tax at a rate below 15% without another country being entitled to tax that income instead. That way countries are dissuaded from enacting or maintaining ‘low tax’ regimes and companies are dissuaded from locating in ‘low tax’ countries even if they remain low tax.
Behind this simple concept though lie two fundamentally complex questions. First how should a company’s effective rate of tax be measured? Second who gets to charge any shortfall? The mechanics of pillar two’s model rules (as defined in article 10 of pillar two) have been nicely explained in this journal (see ‘The OECD’s pillar two...
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Mark Bevington (ADE Tax) highlights the ‘traps’ on the operation of the pillar two model rules which might generate a tax charge when none was expected.
The concept behind pillar two is a simple one: it seeks to ensure that countries cannot levy corporate income tax at a rate below 15% without another country being entitled to tax that income instead. That way countries are dissuaded from enacting or maintaining ‘low tax’ regimes and companies are dissuaded from locating in ‘low tax’ countries even if they remain low tax.
Behind this simple concept though lie two fundamentally complex questions. First how should a company’s effective rate of tax be measured? Second who gets to charge any shortfall? The mechanics of pillar two’s model rules (as defined in article 10 of pillar two) have been nicely explained in this journal (see ‘The OECD’s pillar two...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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