OECD Eyes Final Hurdles to 2024 Implementation of Global Tax Deal
Tax attorney Joshua Odintz spoke with Bloomberg Law about the status of Pillar Two in the implementation of the landmark 2021 global tax deal. With the European Union (EU) set to apply the 15 percent global minimum tax next year, and a goal for governments to finish negotiations on the profit reallocation rules in the coming months, the deal is well on its way to a 2024 implementation. The minimum tax, also known as Pillar Two, will require significant work from the U.S. and other foreign governments — including administrative guidance.
The article explains that tax authorities and companies will need to resolve a number of issues before the rules go into effect — including the interaction of said rules, dispute resolution and how U.S. tax laws will be treated. The U.S.’s existing minimum tax, the global intangible low-taxed income (GILTI) rules, will be considered a controlled foreign corporation (CFC) tax under Pillar Two’s rules, but companies need technical guidance on “agreed upon methodologies for pushing down GILTI” and the U.S.’s new corporate alternative minimum tax to foreign subsidiaries, said Mr. Odintz.
Businesses also are looking for countries “to revisit certain policy calls, including the treatment of tax credits and the valuation of deferred tax assets,” he said. Many U.S. tax credits could lead to a foreign jurisdiction taxing a company on its low-taxed U.S. income under Pillar Two.
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