In the Headlines
October 29, 2021

Carveout in Global Minimum Tax Unlikely to Incite Abuse


Tax attorney Joshua Odintz spoke with Law360 about carveouts included in the Organization for Economic Cooperation and Development's 15 percent global minimum tax system. Under the two-pillar plan, agreed to by 136 jurisdictions worldwide, companies can take advantage of economic substance-based carveouts, which tax practitioners say recognize that certain tangible costs provide value for companies. U.S. tax law currently exempts the deemed return of 10 percent of U.S. multinational corporations' qualified business asset investment (QABI), and Mr. Odintz said the carveout language in Pillar Two of the OECD agreement could encourage the U.S. to adopt a more generous exemption, perhaps even including payroll in reform plans. However, none of those changes have materialized.

With the OECD expected to release model legislation for implementing Pillar Two at the end of November, Mr. Odintz commented that the model will show "what the real limitations are and how it will operate."

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