The OECD announced on December 21 that it will seek stakeholder input on four elements of the October 8 international tax agreement. Two of the consultations will address components of the Pillar 1 profit allocation rules, and the other two will address global minimum tax matters under Pillar 2.
The announcement of the consultations comes the day after the OECD released model rules under Pillar 2.
Following up on the Pillar 2 model rules, the OECD expects to hold a consultation on the “implementation framework” for Pillar 2 in February, with a focus on administration and compliance issues to be completed by the end of 2022.
This will be followed in March 2022 by a draft model provision and commentary on the subject to tax rule under Pillar 2, as well as a draft multilateral instrument to facilitate the rule’s implementation. The OECD states that it will include a defined set of questions on the model provision and commentary for input.
Regarding Pillar 1, separate consultations will cover “Amount A” and “Amount B.” Amount A refers to the portion of residual profit of in-scope businesses to be allocated to market jurisdictions for tax purposes. Amount B refers to a fixed return for baseline marketing and distribution activities in a market jurisdiction in approximation of the arm’s length principle.
On Amount A, the OECD plans to release for consultation a working document “in the coming months” that will cover “the separate building blocks of Amount A.” OECD work on a comprehensive document on Amount A will continue in parallel with the consultation.
The consultation document on Amount B will follow in “mid-2022.”
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