The Global Minimum Tax | Selected Issues on Pillar Two

S. 41. Introduction

Due to the modern changes in the economy, more specifically digitalization and globalization, changes to the ways international taxation worked had to be made so as to be more in line with the contemporary challenges met by both taxpayers and sates. In order to solve these newly emerged issues, the OECD started the Base Erosion and Profit Shifting Project (Hereafter “BEPS”) in 2013. From this project, two pillars were born with the second one aiming at creating a floor to tax competition by creating a minimum effective tax rate of 15% for multinational enterprises (MNEs). By doing so, the OECD’s and the Inclusive Framework’s project is fundamentally changing the world of international taxation by setting forth a global minimum tax. This will be achieved through, amongst other measures, the GloBE Model Rules which are model rules meant to be incorporated into the domestic law of the jurisdictions taking part in the Inclusive Framework. Notably, the implementation of these rules is not mandatory, but if jurisdictions do decide to implement the GloBE Model Rules into their domestic legislation, they must do so according to the “common approach”. This means that the dome...