Profit recognition under GloBE and domestic rules: it’s all in the timing

01 February 2022

On 20 December 2021, the OECD published model global anti-base erosion (GloBE) rules.

The rules, which are the main component of pillar two of the BEPS 2.0 initiative that has been endorsed by 137 countries, aim to ensure that large multinationals pay an effective tax rate (ETR) of at least 15% on their profits arising in each jurisdiction. The rules are 70 pages long and analysing them will keep practitioners busy over the coming weeks and months.

This article focuses on one fundamental aspect: the mechanism for dealing with differences between when a company’s profits are recognised for domestic tax purposes and for the GloBE rules (referred to here as “timing differences”). It explains the thinking behind the approach the OECD has ultimately taken and the implications for businesses.

Read the full article.

This article was first published by Tax Journal.

Keep up to date with the latest developments and other useful information on our OECD BEPS 2.0 hubpage.  

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