The Global Minimum Tax | Selected Issues on Pillar Two

S. 2681. Introduction to the most important exclusion to the GloBE Regime

In a nutshell, “excluded entities” refer to entities that are explicitly excluded from the scope of the obligations set forth in the global anti-base erosion (GloBE) rules. The notion of “excluded entity” shall be studied as an exception to this OECD-conceived regime. It is therefore a question of scope from which the title “Excluded Entity” is a part of in the GloBE Model Rules. Before delving further into the exceptions, it is necessary to cover some aspects of the Pillar Two regime in order to understand how the exception is built and to discuss its relevance.

This twelfth chapter of the book aims to discuss an exclusion to a legal regime and its relevance. As stated in the OECD’s foreword of the rules, the objective is to “ensure that multinational enterprises pay a fair share of tax wherever they operate and generate profits”. The introduction and application of these rules respectively target the generation of additional revenue and the reduction of profit-shifting activity. The GloBE rules ensure the taxation at an effective rate of at least 15% for multinational enterprises’ (MNEs) foreign income, “restoring ...