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OECD releases manual on the handling of multilateral mutual agreement procedures and advances pricing arrangements pursuant to tax certainty agenda

Excerpts from OECD.org, 1 February 2023

In line with the Forum on Tax Administration’s (FTA) tax certainty agenda, the OECD has published a Manual on the Handling of Multilateral Mutual Agreement Procedures (MAPs) and Advance Pricing Arrangements (APAs), intended to be abbreviated as the MoMA.

It is widely acknowledged that multilateral MAPs and APAs offer greater tax certainty to taxpayers and tax administrations where multiple bilateral tax treaties cover different parts of the same transaction or arrangement involving a multinational enterprise. However, most jurisdictions have limited experience in coordinating bilateral MAP and APA cases to offer multilateral certainty. Accordingly, the MoMA is intended as a guide to multilateral MAP and APA processes from both a legal and procedural perspective and suggests different approaches based on the practices of jurisdictions without imposing a set of binding rules.

The MoMA allows tax administrations to explore whether implementing these procedures is appropriate considering the circumstances of their own MAP and APA programs and whether the guidance therein may be incorporated in their domestic guidance on MAP or APA processes to provide additional clarity. The MoMA also outlines the actions and cooperation expected from taxpayers to allow tax administrations to consider MAP and APA cases multilaterally. The MoMA is the result of the work done within the FTA MAP Forum.

OECD releases technical guidance for implementation of the global minimum tax

Excerpts from OECD.org, 2 February 2023

The OECD/G20 Inclusive Framework on BEPS released today technical guidance to assist governments with the implementation of the landmark reform to the international tax system, which will ensure multinational enterprises (MNEs) will be subject to a 15% effective minimum tax rate.

The Agreed Administrative Guidance for the Pillar Two Global Anti-Base Erosion (GloBE) Rules will ensure coordinated outcomes and greater certainty for businesses as they move to apply the global minimum corporate tax rules from the beginning of 2024. Together with the December 2022 publication of the Safe Harbours and Penalty Relief document and public consultations on the GloBE Information Return and Tax Certainty, today’s release finalizes the Implementation Framework as set out in the October 2021 Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.

The document issued today includes guidance on the recognition of the United States’ minimum tax (known as the Global Intangible Low-Taxed Income (GILTI) under the GloBE Rules and on the design of Qualified Domestic Minimum Top-up Taxes. It also includes more general guidance on the scope, operation and transitional elements of the GloBE Rules to allow Inclusive Framework members that are in the process of implementing the rules to reflect this guidance in their domestic legislation in a coordinated manner. The guidance responds to stakeholder feedback on technical issues, such as the collection of top-up tax in a jurisdiction in a period where the jurisdiction has no GloBE income and the treatment of debt releases and certain tax credit equity structures.