On 20 December 2022 the OECD’s Inclusive Framework issued the consultation document Pillar Two – GloBE Information Return, setting out proposals on the information return to be completed by multinationals in relation to the global minimum tax. Comments are invited from Interested parties by 3 February 2023.

The consultation document relates to the development of a standardised GloBE Information Return (GIR) containing the information that a tax administration would need to evaluate the correctness of a constituent entity’s GloBE tax liability and to perform a risk assessment. The proposals have been developed by the Inclusive Framework’s Focus Group on GloBE Co-ordination, Information Collection and Exchange (CICE) which is made up of policy experts with experience in the technical development of the GloBE Rules.

The Inclusive Framework needs to balance administrative requirements and compliance concerns, ensuring that the information and tax calculations that an MNE Group is required to file are sufficient to permit tax administrations to check the tax liability under the GloBE Rules and perform an appropriate risk assessment.

The obligation to prepare a GIR is separate from the requirement to complete a tax return. The operation of tax filing and payment rules is the responsibility of each implementing jurisdiction and will be in line with the jurisdiction’s own tax filing and payment procedures.

The consultation document sets out a comprehensive set of the data points that a multinational may need to collect to allow it to calculate the GloBE tax liability. The data points and are sorted into four sections, these being general information about the MNE Group and the filing constituent entity; the corporate structure; the effective tax rate (ETR) computation and top-up tax computation, including information on the ETR, top-up tax computations, any elections made and simplified compliance procedures resulting from agreed safe harbours; and the top-up tax allocation and attribution.

Although the consultation document sets out all the data points that an MNE Group may need to collect, it may not always be necessary for multinationals to collect all the information in respect of every constituent entity and jurisdiction, to determine if a GloBE tax liability has arisen in a particular implementing jurisdiction.

The detailed scope of the information to be supplied to a tax authority through local filing or exchange of information is still under discussion. The Inclusive Framework is inviting comments from stakeholders on the amount and type of GloBE information that needs to be collected and reported to a tax administration.

Under the GloBE rules, the requirement for each constituent entity to file a GIR is removed when the ultimate parent entity (UPE) or a designated filing entity files the GIR with the tax administration of the jurisdiction where it is located, and there is a Qualifying Competent Authority Agreement in effect that permits the exchange of GloBE information with the relevant jurisdiction.

The Inclusive Framework may consider including other administrative mechanisms to improve coordination and consistent application of the GloBE Rules, including the development of a coordinated framework for further information requests where the information in the GIR leads to the identification of further risks. Also, the implementing jurisdictions could carry out coordinated risk assessment activities.