New guidance on Pillars One and Two

The OECD Inclusive Framework on BEPS has published new, additional guidance on Amount B of Pillar One covering the following two points:

1. Definitions of qualifying jurisdictions within the meaning of sections 5.2 and 5.3 of the Amount B guidance: The new definitions are intended to facilitate adjustments to the return calculated under the simplified and streamlined approach for tested parties located in those qualifying jurisdictions. The definitions are now incorporated into the Amount B guidance in the annex to Chapter IV of the OECD Transfer Pricing Guidelines. Sections 5.2 and 5.3 are part of the section ‘determining the return under the simplified and streamlined approach’ of the Amount B guidance.

2. Definition of covered jurisdictions within scope of the political commitment on Amount B: This covers the definition and also sets out the current list of covered jurisdictions for Amount B.

Further guidance has also been released which the OECD says clarifies and simplifies the application of the Pillar Two global minimum tax and provides an ‘overview of the streamlined process for recognising qualified status for the legislation of jurisdictions implementing the Global Anti-Base Erosion (GloBE) Rules’. This includes the agreed administrative guidance, country-by-country reporting safe harbour guidance, and a question and answer document on ‘qualified status’ (transitional protections providing certainty for jurisdictions that their rules will be recognised by other implementing jurisdictions, aiming to avoid double charging of top-up tax).