Update on Temporary Business Energy Support Scheme
The following article by tax director Nóirín Cahalane was featured in Irish Times on 27 April 2023.
Update on the OECD inclusive Framework on BEPS
The solution is made up of:
The OECD is currently progressing through different phases of public consultations on Pillar One. These public consultations are expected to continue until mid-2022. The OECD’s timetable for implementation of Pillar One is scheduled for 2023, however, uncertainty as to the final content and timeframe remains.
As referred to above, Pillar Two aims at introducing a common approach for a global minimum effective tax rate of 15% applicable to multinational enterprises (MNEs) with a global annual turnover in excess of €750m. The OECD is expected to publish three sets of guidance under Pillar Two.
The first set of guidance, the Model Global Anti-Base Erosion (“GloBE”) rules, were published on 20 December 2021 and cover the income inclusion rule (IIR) and the undertaxed payments rule (UTPR).
The main takeaways from the Model Rules are: -
The Model Rules are complex and further guidance is expected on key concepts in due course. Excluded from the Model Rules were details on the Subject to Tax Rule (STTR). The STTR provides for withholding tax on payments included on a defined list (e.g., interest, royalties), from developing countries. Details on this rule are expected to be released in early to mid-2022.
Other challenges lie ahead of Pillar Two implementation, particularly regarding its co-existence with the US GILTI rules. The US GILTI rules are linked to the Build Back Better Act, which did not pass the US Senate in 2021. To date, discussions regarding tax reform, particularly the GILTI rules, are still underway. The main concern is that the GILTI rules are not currently determined on a jurisdiction-by-jurisdiction basis and would apply a (nominal) effective rate of tax of 10.5%. As a result, it is not clear whether other countries will agree to US GILTI co-existence.
In light of the complexities involved, timing in relation to the introduction of the new rules is currently uncertain. The earliest timeframe being considered is for the rules to be effective in 2023 for the Income Inclusion Rule (IIR) and 2024 for the Undertaxed Payments Rule (UTPR).
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars corporate tax team.
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