Treasury Welcomes Clear Guidance on Pillar Two Global Minimum Tax, Tax Credit Protections

The U.S. Department of the Treasury (USDT) has published a press statement to announce the following:
In view of the global effort to fight against base erosion and profit shifting (BEPS) by establishing a (minimum) taxation framework for large, multi-national group entities and the increasing number of states that are adopting corresponding rules and regulations to transpose this BEPS initiative, the Organisation for Economic Cooperation and Development (OECD) has recently published a set of guidances in this context:
1. The Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global AntiBase Erosion Model Rules (Pillar Two) and
2. The Safe Harbours and Penalty Relief: Global Anti-Base Erosion Rules (Pillar Two).
The guidances are aimed at harmonizing the application of the BEPS framework throughout participating countries and address several key issues particularly relevant for large multi-national firms such as the scope of companies that fall under the new BEPS framework and the transitional rules that may apply before the final tax requirements apply. The documents also provide clarifications as to the treatment of tax credits, specifically tax credits pertaining to low-income housing, the treatment and application of the U.S. global minimum tax regime versus the new BEPS requirement, and the collection of top up taxes in certain circumstances.
—————–
The USDT strongly welcomes the new global initiative and the publication of the guidances to afford a level playing field among large corporations and to guide firms in their understanding and adherence to the new BEPS framework.