This is my summary of the ordering of the Pillar Two (and related) rules:
The OECD will then review all QDMTTs, IIRs and UTPRs to make sure they are in line with the standards, i.e. ‘qualified’. While we know that a non-qualified tax should be ignored, nobody really knows yet what the practical implications are of a tax being non-qualified, especially over a number of years where tax liabilities have already been paid.
An MNC group will file returns for each STTR (unless incorporated into existing withholding tax returns), QDMTT for each QDMTT jurisdiction, IIR for the group that may need to include QDMTTs recalculated to the OECD standard, and possibly UTPR in each UTPR jurisdiction. Each of these returns may be based on slightly different numbers, and the OECD is working on how to align these and how to deal with controversy, and it will, at some stage, publish relevant guidance.
Wouldn’t it be easier if the rules simply required MNC groups to file a single IIR return to the OECD and pay a single self-assessed tax amount for the entire group to the OECD? The OECD would then crunch the numbers, and allocate the rest to the relevant jurisdictions under the STTR/QDMTT/IIR/UTPR waterfall? I am sure audits and enforcement framework could be worked out within the Inclusive Framework.
Tom Toryanik, EY (commenting here in a personal capacity)
This is my summary of the ordering of the Pillar Two (and related) rules:
The OECD will then review all QDMTTs, IIRs and UTPRs to make sure they are in line with the standards, i.e. ‘qualified’. While we know that a non-qualified tax should be ignored, nobody really knows yet what the practical implications are of a tax being non-qualified, especially over a number of years where tax liabilities have already been paid.
An MNC group will file returns for each STTR (unless incorporated into existing withholding tax returns), QDMTT for each QDMTT jurisdiction, IIR for the group that may need to include QDMTTs recalculated to the OECD standard, and possibly UTPR in each UTPR jurisdiction. Each of these returns may be based on slightly different numbers, and the OECD is working on how to align these and how to deal with controversy, and it will, at some stage, publish relevant guidance.
Wouldn’t it be easier if the rules simply required MNC groups to file a single IIR return to the OECD and pay a single self-assessed tax amount for the entire group to the OECD? The OECD would then crunch the numbers, and allocate the rest to the relevant jurisdictions under the STTR/QDMTT/IIR/UTPR waterfall? I am sure audits and enforcement framework could be worked out within the Inclusive Framework.
Tom Toryanik, EY (commenting here in a personal capacity)