The OECD has released essential guidance on implementing the Pillar 2 GloBE rules on 15 January 2025.

Jurisdictions implementing Pillar 2 must calculate an MNE’s tax liability using their local legislation, which may differ from calculations based on OECD model rules. Due to the agreed common approach, the rule order requires jurisdictions with lower-priority rules (e.g., IIR or UTPR) to wait for those with higher-priority rules (e.g., QDMTT) to complete their calculations first.

Additionally, the Globe Information Return must include calculations based on both OECD model rules and local jurisdiction rules, starting with the CbC safe harbour calculations.

Central record of legislation with transitional qualified status

The global minimum tax incorporates an agreed rule order that limits the application of the minimum tax rules in one jurisdiction where there are “qualified” rules in another jurisdiction. In 2024, the Inclusive Framework on BEPS agreed on a fast-track process for confirming the qualified status of a jurisdiction’s domestic legislation on a transitional basis. The Central Record of Legislation with Transitional Qualified Status sets out those jurisdictions whose minimum tax legislation has completed the agreed process and secured transitional qualified status. This document will be updated on a regular basis and in a timely manner, to include additional minimum tax legislation that has completed the fast-track process.

In connection with the release of the Central Record, the Inclusive Framework has agreed further Administrative Guidance on Article 9.1 of the GloBE Model Rules which excludes certain deferred tax assets for purposes of computing an MNE Group’s effective tax rate when they arose prior to the application of the global minimum tax as a result of certain governmental arrangements or following the introduction of a new corporate income tax. While this guidance clarifies the application of Article 9.1, some jurisdictions may need to consider whether they need to amend their domestic legislation to apply some aspects of this guidance.

GloBE Information Return (GIR) and MCAA

Today, the Inclusive Framework also releases an update to the standardised GloBE Information Return (GIR), a supporting XML schema and a Multilateral Competent Authority Agreement to facilitate central filing and exchange of the GIR.

The GIR is a standardised information return that implementing jurisdictions will use to evaluate the correctness of a constituent entity’s liability under its minimum tax rules. The GIR may be filed in a single jurisdiction with the relevant parts of that return being exchanged with other implementing jurisdictions. The updated version of the GIR (initially released in July 2023) incorporates simplifications and clarifications based on stakeholder feedback which address cases where no jurisdictions have taxing rights under the GloBE Rules. A new annex sets out a notification template that jurisdictions could use when they require a notification from MNE Groups that they will receive the GIR through exchange of information. In addition, the Inclusive Framework on BEPS has agreed further guidance on how to complete certain sections of the GIR.

To support the central filing and exchange of the GIR, the Inclusive Framework has now released the GIR Multilateral Competent Authority Agreement (MCAA) and the related Commentary as well as the GIR XML Schema and User Guide. The GIR MCAA sets out the conditions and modalities for the automatic exchange of GIR information under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the GIR XML Schema and User Guide reflect the content and structure of the GIR in a common electronic format. Further work will be undertaken on a common approach towards data consistency and quality in the form of validation rules to be applied to the GIR information prior to filing and exchange.