Tax challenges arising from the digitalisation of the economy
The Organisation for Economic Cooperation and Development (OECD) is working full steam on the two-pillar solution of the Base Erosion and Profit Shifting (BEPS) 2.0 project. Multinational enterprises across industries are likely to be affected. Check out the latest developments and PwC insights to get prepared for the new tax era.
“BEPS 2.0 has brought groundbreaking changes to the international tax landscape. Multinational enterprises should take immediate actions to assess the potential impact on their business models and global tax liabilities, as well as to get themselves prepared for the additional tax compliance and reporting requirements.”
Pillar One
Supplementary guidance on Amount B
The OECD released the following on 17 June 2024:
- the definitions of ‘qualifying jurisdictions’ for the purposes of the operating expense cross-check and the data availability mechanism; and
- the definition of ‘covered jurisdictions’ within scope of the political commitment on Amount B.
Report on Amount B
The report follows the OECD’s July 2023 public consultation on Amount B and the content has been incorporated into the OECD Transfer Pricing Guidelines.
14 March 2024
Updated timeline for implementing Amount A
The Inclusive Framework on BEPS released a statement on 18 December 2023 committing to finalising the text of the multilateral convention to implement Amount A by the end of March 2024, with a view to holding a signing ceremony by the end of June 2024.
17 January 2024
Multilateral convention to implement Amount A
An overview of the multilateral convention released by the OECD on 11 October 2023 to implement Amount A
31 October 2023
Second OECD consultation on Amount B
The consultation document outlines the design elements of Amount B and identifies aspects which require further work.
19 July 2023
OECD presses on with the finalisation of Pillar One
An overview of the Pillar One public consultation documents released by the OECD since late May 2022
17 February 2023
OECD consultation on scope of Amount A and exclusions for extractives and regulated financial services – An overview
An overview of when an MNE group will be in scope of Amount A and the relevant exclusions
8 June 2022
OECD consultation on tax base determinations of Amount A
Computation of the profit or loss of in-scope MNE groups that will be used for the calculation of Amount A
4 March 2022
OECD consultation on revenue sourcing and nexus of Amount A
Determining whether a jurisdiction qualifies for profit reallocation under Amount A
15 February 2022
Pillar Two
Consultation outcome on implementation of global minimum tax and Hong Kong minimum top-up tax released
On 30 October 2024, the HKSAR Government released the consultation outcome on the implementation of the global minimum tax and the Hong Kong minimum top-up tax. We are pleased that the Government has carefully considered the constructive comments provided by various stakeholders including PwC, and thoroughly consulted the OECD. An amendment bill is expected to be introduced in January 2025.
31 October 2024
Nine jurisdictions sign STTR Multilateral Instrument
The OECD hosted a signing ceremony for the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR Multilateral Instrument) on 19 September 2024, during which nine jurisdictions signed the STTR Multilateral Instrument and ten other jurisdictions expressed their intent to sign.
20 September 2024
Further guidance on the GloBE rules
The OECD released on 17 June 2024 the fourth set of administrative guidance on the GloBE rules and an FAQ document on the mechanisms for determining the qualification status of jurisdictions’ GloBE rules.
22 July 2024
Consolidated GloBE commentary and illustrative examples
The documents were released on 25 April 2024 and consolidate the original version of the documents with the various sets of administrative guidance released up to the end of 2023.
6 May 2024
Further administrative guidance on the GloBE rules
An overview of the third set of administrative guidance on the GloBE rules released by the OECD on 18 December 2023
17 January 2024
Consultation on the implementation of BEPS 2.0 in Hong Kong
The HKSAR Government has launched a three-month consultation on 21 December 2023 on the implementation of the GloBE rules and a minimum top-up tax in Hong Kong. Subject to the outcome of the consultation exercise, the HKSAR Government targets to introduce the legislative amendments into the Legislative Council in the second half of 2024.
3 January 2024
Bermuda introduces corporate income tax in response to Pillar Two
Effective from 2025, a 15% corporate income tax will be applicable to Bermuda businesses that are part of multinational enterprise groups with annual revenue of EUR750m or more. The dedicated webpage on the Bermuda government’s website can be accessed via this link.
27 December 2023
Multilateral instrument implementing the STTR opens for signature
On 3 October 2023, the Inclusive Framework on BEPS announced the conclusion of negotiations on a multilateral instrument (MLI) to implement the STTR. As of 2 October 2023, the MLI is open for signature by all states without reservations.
5 October 2023
STTR, further administrative guidance and GloBE information return
An overview of the captioned documents released by the OECD on 17 July 2023
21 August 2023
IASB issues amendments to provide temporary relief from deferred tax accounting for Pillar Two
The International Accounting Standards Board (IASB) has issued amendments to IAS 12 Income Taxes to provide temporary relief for companies from accounting for deferred taxes arising from the implementation of Pillar Two. The press release from the IFRS Foundation can be accessed via this link.
23 May 2023
Administrative guidance on the GloBE rules
Addressing a wide range of issues identified as being most in need of immediate clarification and simplification
3 March 2023
Safe harbours and penalty relief, GloBE information return and tax certainty – An overview
An overview of the captioned guidance and public consultation documents released by the OECD on 20 December 2022
4 January 2023
Impact of Pillar Two on international shipping business
Exploring the GloBE exclusion for international shipping income and the potential impact on shipping groups in Hong Kong
8 April 2022
GloBE commentary and OECD consultation on the implementation framework
The commentary provides technical guidance and elaborates on the application and operation of the GloBE rules
4 April 2022
Model GloBE rules
Model rules covering the income inclusion rule (IIR) and undertaxed payment / profits rule (UTPR)
7 January 2022
How PwC can help your company with Pillar Two
PwC can help you assess and model the likely financial and operational consequences of Pillar Two. Please click here to learn more and feel free to get in touch with our tax professionals below.
To understand the status of Pillar Two implementation in different jurisdictions, please visit PwC's Pillar Two Country Tracker.
Other news and updates
OECD releases report to G20 Finance Ministers and four key documents under Pillar One and Pillar Two – An overview
An overview of the following documents released by the Inclusive Framework on BEPS on 17 July 2023:
- OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors;
- Public consultation document on Amount B of Pillar One;
- Pillar Two Subject to Tax Rule (STTR);
- Pillar Two GloBE information return; and
- The second set of Pillar Two administrative guidance.
Latest OECD statement on Pillar One and Pillar Two
On 11 July 2023, 138 out of 143 members of the Inclusive Framework on BEPS approved the Outcome Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.
13 July 2023
136 jurisdictions agree on a new international corporate tax framework under BEPS 2.0
Mainland China and Hong Kong SAR are amongst the 136 jurisdictions that have agreed to the new framework
12 October 2021
The OECD’s blueprints on Pillar One and Pillar Two
Setting out the detailed technical design of various components of the two pillars, subject to agreement
13 October 2020
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