Global Minimum Tax

Understand how global minimum tax blocks profit shifting to low-tax jurisdictions by ensuring a minimum tax on income, and apply rules that deny deductions or tax the ultimate parent.

Explore developments in the global minimum tax, from the 2018 digital economy consensus to OECD pillar two, 15% rate, and the push for a 2023 multilateral convention implementation.

The global minimum tax sets a 15% tax floor on multinational income to avoid double taxation. It applies to groups with €750m revenue and excludes funds, governments, international bodies, not-for-profits.

Analyze the global minimum tax rules, including the income inclusion rule, under tax payment rule, and switchover, and how top up tax combats low tax income and base erosion.

Explore how the income inclusion rule under the global minimum tax imposes a 15% top-up tax on the ultimate parent entity, using top-down and split-ownership approaches.

explain the top-down income inclusion rule for the ultimate parent entity, outlining equity ownership requirements, jurisdictional implementation, and how a higher-level controller affects applicability.

Explore the switchover route under the global minimum tax, where a permanent establishment may incur a top-up tax if treaty exemptions or low local taxes fall below GMT 15%.

Explore undertaxed payment rules under the global minimum tax, detailing how income inclusion and low-tax jurisdictions trigger top-tax collection and adjustments between related entities.

Compare the income inclusion rule and the under taxed payment rule in the global minimum tax context. Focus on ultimate parent entity, AIA jurisdictions, and low tax constituent entities.

Explore examples and assumptions of the global minimum tax. Confirm revenue over €750 million, no excluded entities, a USD 100 tax base, and no covert payments between connected parties.

Identify a low tax constituent entity with an effective tax rate below 15%. Compute the top-up tax paid by the ultimate parent entity under IIR, here 2.5 on income 100.

This example shows 30% ultimate entity tax in country X and 19% for ESCO; since effective tax rate exceeds 15%, GMT provisions do not apply under income inclusion rule.

Identify the low tax constituent entity between Iron Co and the school, apply the global minimum tax top-up, and analyze the top-down approach when the UAE does not implement iota.

Analyze an example where the ultimate parent bears top-up tax on ESCO’s income, with 30% UP, 19% subsidiary, 0% escrow, and income inclusion rules affecting top tax through no push-down.

This gmt example analyzes a parent with 19% and subsidiaries at 20% and 0%, showing a 10% effective tax rate and whether gmt applies per jurisdiction.

Raise corporate rates in low-tax jurisdictions and curb tax arbitrage as the global minimum tax takes effect, while offering easier business conditions and exemptions on capital gains and dividend income.