OECD Publishes Pillar Two Model Rules On IIR And UTPR

On 20 December 2021, the OECD released its Pillar Two model rules, also referred to as the "Anti Global Base Erosion" or "GloBE" rules, for participant jurisdictions to implement most of the Pillar Two rules. These rules seek enforcing a minimum 15% effective tax rate on profits earned by large multinational enterprises in each jurisdiction where they realise profits. The entry into force is targeted for 2023.

The  publication of the GloBE rules lifts the veil on a range of details that are very relevant for taxpayers, such as how pre-Pillar Two losses will be taken account, which entities can effectively benefit from a carve-out, and what Pillar Two compliance will require.

The publication of the model rules marks the launch of the implementation phase. Participating jurisdictions in the OECD Inclusive Framework may have different paces of implementation, which may increase Pillar Two compliance complexity during an initial period.