The Global Minimum Tax | Selected Issues on Pillar Two

1. Introduction

What are the reasons behind the creation of Pillar Two?

The globalization and digitalization of the economy have been allowing multinational companies to reduce their global tax burden and increase their profitability through the allocation of mobile assets and income in jurisdictions with a lower tax burden or even zero tax rates. In light of this, concern arose within the G7 and, within the Organization for Economic Cooperation and Development (OECD). Guidelines and measures have been issued to mitigate the impact of what has been called “harmful tax competition, harmful tax practices, and tax havens”.

S. 138The OECD issued this type of guideline much before the Global Anti-base Erosion (GloBE) Rules, for example, the report issued in 1987 on “International Tax Avoidance and Evasion” and the report “Harmful Tax Competition: An Emerging Global Issue” issued in 1998. Since then, there have been many reports trying to tackle this “profit shifting” with the most notable being the Base Erosion and Profit Shifting (BEPS) Project promoted by the G20 in 2013 that was materialized in 15 Actions. Those 15 actions, however, were not enough to tax multinational companies that, in a di...