OECD releases detailed Commentary on the GloBE rules

Mar 17, 2022
Business tax International tax

On March 14, 2022, the Organisation for Economic Co-operation and Development (OECD) released additional technical guidance (Commentary) on the 15% global minimum tax agreed in October 2021 as part of the two-pillar solution to address the economic tax challenges arising from digitalization.  

The Commentary, which is intended to promote a consistent interpretation of the Global Anti-Base Erosion rules (GloBE rules) released in December 2021, would guide tax administrations and Multinational Enterprises (MNEs) with revenues above EUR 750 million on how to apply the GloBE rules.     

To this end, the Commentary and illustrative examples provide comprehensive technical guidance on the operation and intended outcomes of the GloBE rules. The Commentary addresses various issues, including compatibility of a jurisdiction’s existing rules with the GloBE regime, covering measures such as domestic minimum top-up taxes and rules that would qualify as IIR and UTPR equivalents.  

The Commentary also explains the decision to use euros for the monetary thresholds and recommends that jurisdictions use euros when implementing the new rules. However, the guidance says that jurisdictions that can’t do so without running into legal or practical obstacles may use their domestic currency but must rebase that threshold annually. 

The Commentary further explains the GloBE rules, including scope, calculation of GloBE income or loss, adjusted covered taxes, effective tax rates, top-up tax, general administration, and transition rules. The Commentary concludes with how guidance on the rules will apply to corporate restructurings and holding structures, tax neutrality, and distribution regimes.  


Multinational enterprises expecting to get more clarity about how the US global intangible low-taxed income (GILTI) regime would coexist with the new rules may have to wait a little longer for answers. While the Biden administration currently supports the OECD’s Pillar Two regime, it is not clear whether the current set of GILTI rules are fully consistent with the Pillar Two rules, and currently, there are no active legislative proposals that would conform the GILTI rules to those rules. If the GILTI rules are non-compliant with Pillar Two principles, taxpayers may face adverse consequences, including potential double tax 

Next Steps

The next step in the process for the OECD/G20 Inclusive Framework on BEPS will involve developing an implementation framework to support tax authorities in implementing and administering the GloBE Rules. According to the Commentary, the framework will consist of processes and guidance for countries to coordinate the adoption of the new rules. The implementation framework will also cover administrative procedures such as developing safe harbors to help MNEs and tax authorities with their compliance efforts.

As stated in the Commentary, “this will include implementing a process to assist tax administrations in determining whether a country has introduced a qualified Income Inclusion Rule (IIR). To facilitate transparency, consistency, and coordination, the outcome of these determinations will be released and made publicly available.” 

As the first step in this process, the Inclusive Framework will undertake a public consultation starting March 14 to collect input from stakeholders on the matters they consider need to be addressed as part of the Implementation Framework. The feedback period closes on April 11, and the OECD plans on holding a virtual public consultation at the end of April. 

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