The OECD Pillar 2 Framework And Current Status Of The Rules In Australia

Introduction

In this article, we provide an overview of the OECD Pillar 2 framework and the current status of the rules in Australia, and discuss some of the key implications and challenges for Australian taxpayers and tax practitioners.

The Organisation for Economic Co-operation and Development (OECD) has developed a two-pillar solution to address the tax challenges arising from the digitalisation and globalisation of the economy. The two pillars aim to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate and create value, and to prevent the erosion of the tax base and the shifting of profits to low-tax jurisdictions.

The OECD has released a series of reports and guidance documents on the two-pillar solution, including the Model Rules on the Global Anti-Base Erosion (GloBE) Rules, which are the core component of Pillar Two. The GloBE Rules consist of four interlocking rules: the Income Inclusion Rule (IIR), the