[World Tax News] OECD Publishes Guidance to Ensure Consistent Implementation & Application of Global Minimum Tax and More

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. OECD publishes guidance to ensure consistent implementation & application of Global Minimum Tax

The OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) released supplementary elements relating to the report on Amount B of Pillar One and guidance to ensure consistent implementation and application of the global minimum tax under Pillar Two.

Amount B of Pillar One

A report on Amount B provides a simplified and streamlined approach to the application of the arm’s length principle to baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries.

The additional guidance published includes:

• The definitions of qualifying jurisdictions within the meaning of sections 5.2 and 5.3 of the Amount B guidance. These definitions will facilitate adjustments to the return calculated under the simplified and streamlined approach for tested parties located in those qualifying jurisdictions.
• The definition of covered jurisdictions within the scope of the political commitment on Amount B.

Pillar Two

The Inclusive Framework also releases further guidance clarifying and simplifying the application of the global minimum tax and an overview of the streamlined process for recognising qualified status for the legislation of jurisdictions implementing the Global Anti-Base Erosion (GloBE) Rules.

(a) Administrative Guidance:
The Inclusive Framework has released agreed Administrative Guidance on a number of key topics where consistency and simplifications were sought by Inclusive Framework members and stakeholders.

(b) CbCR Safe Harbour guidance:
The Inclusive Framework released additional interpretative CbCR guidance, which also ensures the consistent treatment of those intragroup payments and avoids the need for further adjustments under the global minimum tax, where a consistent treatment is applied first.

(c) Qualified Status:
In light of the rapid adoption of the global minimum tax, the Inclusive Framework has agreed on a streamlined process for recognising which jurisdictions have qualified rules. The Inclusive Framework Secretariat has now published a question-and-answer document on the OECD website summarising the main features of this Transitional Qualification Mechanism.

Source: OED/G20 Inclusive Framework on BEPS taking further steps on the implementation of the Two-Pillar Solution

2. United States announced suspension of tax treaty with Russia

On June 17, 2024, The U.S. Treasury Department announced that the United States has formally notified Russia of the suspension of Paragraph 4 of Article 1, Articles 5-21, and Article 23 of the United States-Russia income tax treaty, along with its accompanying protocol, by mutual agreement. The suspension will apply to taxes withheld at the source and other taxes starting August 16, 2024, and will remain in effect until further notice from both governments.

Source: Treasury website

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