GloBE Administrative Guidance – The QDMTT and GILTI Allocation

19 Pages Posted: 7 Feb 2023

See all articles by Heydon Wardell-Burrus

Heydon Wardell-Burrus

Oxford University Centre for Business Taxation; University of Oxford - Faculty of Law

Date Written: February 4, 2023

Abstract

Two days ago, the OECD/G20 Inclusive Framework released a package of Administrative Guidance (AG) for the Pillar Two GloBE Rules. The package addressed a variety of key outstanding issues which had been subject to ongoing negotiations by the Inclusive Framework’s Working Party 11. This preliminary analysis addresses the following three developments/clarifications:

1) the GILTI regime is a CFC Tax Regime;
2) the QDMTT applies before CFC Taxes; and
3) there is a new allocation mechanism of GILTI as a Blended CFC Tax.

The document contains three Appendices. The first sets out the ordering priority rules created by the GloBE Rules as clarified in the AG. The second is a step-by-step example of allocating GILTI as a Blended CFC Tax. The third demonstrates the impact of the allocation mechanism on incentives to adopt a QDMTT.

Keywords: Pillar Two, Pillar 2, GloBE Rules, Inclusive Framework, Administrative Guidance

Suggested Citation

Wardell-Burrus, Heydon, GloBE Administrative Guidance – The QDMTT and GILTI Allocation (February 4, 2023). Available at SSRN: https://ssrn.com/abstract=4347814 or http://dx.doi.org/10.2139/ssrn.4347814

Heydon Wardell-Burrus (Contact Author)

Oxford University Centre for Business Taxation ( email )

Saïd Business School
Park End Street
Oxford, OX1 1HP
United Kingdom

University of Oxford - Faculty of Law ( email )

3 Worcester Street
Christ Church
Oxford, OX1 2BX
United Kingdom

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