The Global Minimum Tax | Selected Issues on Pillar Two

1. Introduction

It will not be an exaggeration to say that the undertaxed profits rule (UTPR) is one of the most controversial concepts in the international taxation area stemming from Pillar Two which refers to the global anti-base erosion model rules (GloBE). This is most visible in the public discussion between scholars who, as belligerent sides, split into two opposing extreme positions.

S. 48The ones who name themselves a “UTPR skeptics” provide dozens of arguments against legitimacy of the concept as, according to them, it violates public international law - specifically, customary international law - on the theory that it breaches principles relating to a posited “nexus” requirement for taxation - traditionally “source” or “residence”. The second ones who are “UTPR supporters” respectively do the same job on the opposite side and prove its legitimacy using principles stemming from controlled foreign company rules and other proven grounds for extraterritorial taxation. The fact that both groups are sharing strong arguments to support their positions shows how the topic challenges the core tenets of the settled international tax system as the background for arguments is rooted in fun...