UK and International Tax news
Further OECD Consultation On Draft Rules For Pillar One
Friday 25th February 2022
The OECD is seeking comments on Draft Rules for Tax Base Determinations under Amount A of Pillar One.
Earlier this month, the OECD issued a consultation on the Draft Rules for Nexus and Revenue Sourcing under Pillar One Amount A. The purpose of the revenue sourcing rules is to allow in-scope MNEs to identify the relevant market jurisdictions from which revenue is derived, and to apply a revenue-based allocation key. Revenue is sourced to the end market jurisdictions where goods or services are used or consumed.
The rules provide the detail necessary to identify the end market for specific categories of transactions. Different rules apply to different categories of transactions, and seek to take the relevant commercial context into account and ensure they are complete and can be applied to all types of MNEs.
The OECD is now seeking comments on the Draft Rules for Tax Base Determinations under Amount A of Pillar One.
The purpose of the tax base determinations rules is to establish the profit or loss of an in-scope MNE that will be used for the Amount A calculations to reallocate a portion of its profits to market jurisdictions. The rules determine that profit or loss will be calculated on the basis of the consolidated group financial accounts, while making a limited number of book-to-tax adjustments. The rules also include provisions for the carry-forward of losses.
In their latest consultation, the OECD has requested comments on the draft rules although they do not reflect consensus regarding the substance of the document. Stakeholder input received on the Draft Rules for Tax Base Determinations will assist members of the Inclusive Framework in further refining and finalising the relevant rules.
Interested parties are invited to send their written comments by 4 March 2022.
If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.Contact Us