GLOBAL MINIMUM TAX SERIES – PART 23 List of Elections under Pillar Two

[Amit Jalan]

Friends

Pillar Two introduces a 15% global minimum Effective Tax Rate (“ETR”) for Multinational Enterprise Groups (“MNEs”) with consolidated turnover in excess of €750m. Taxpayers in scope of the rules would calculate their effective tax rate for each jurisdiction where they operate and pay top-up tax for the difference between their effective Pillar Two tax rate per jurisdiction and the 15% minimum rate.

With timely implementation there is a possibility for MNEs to not only save on compliance costs and efforts but also to be able to take the benefit of elections that are allowed under the Globe Rules, most of which are applies for a number of years after the election is made. In this edition we have provided all the elections that are contained within the OECD Model Rules.

We hope this bulletin adds Value in your professional Sphere.

There are a number of Elections provided within the GloBE Rules that MNEs can consider and benefit from as relevant to them, that could help alter the treatment and the result under those rules. These include the:

i) Excluded Entity Election

ii) Election to use the Realization Method

iii) Stock-Based Compensation Election

iv) Election to Spread Capital Gains 

v) Consolidation Election

vi) GloBE Loss Election

vii) Tax Transparency Election

viii) Taxable distribution Election

ix) Unclaimed Accrual Election

x) Distribution Tax Regime Election

xi) Substance-Based Income Exclusion Election

xii) Prior Year Adjustment Election

xiii) Transitional Safe Harbour Election

xiv) De minimis Election

A few other elections have also been provided within the Administrative Guidance to the GloBE Rules. These include:

i) Portfolio Shareholding Election

ii) Foreign Exchange Hedge Election

iii) Excess Negative Tax Carry-Forward Election

iv) Debt Release Election

v) Equity Investment Inclusion Election

vi) Transitional UTPR Safe Harbour Election

vii) QDMTT Safe Harbour Election

We hope this bulletin adds Value in your professional Sphere.