Document Type
Article
Publication Date
7-2024
Abstract
In a recent column, Tax Notes’ Martin Sullivan asked whether a country that wishes to neutralize the effect of pillar 2 on its investment incentives can get around the OECD prohibition on a multinational enterprise receiving what amounts to a refund of the pillar 2 tax it pays to that country. He writes that:
It would make a mockery of the pillar 2 taxation system if an investment hub imposed a 15 percent minimum tax on a company — thereby shielding profit in that hub from other jurisdictions’ pillar 2 tax — and then, through a separate mechanism, unconditionally returned the new revenue dollar-for-dollar to the taxpaying company. Pillar 2 model rules prevent that. But what if the benefits offsetting the tax are not dollar-for-dollar but instead merely approximate the revenue raised from the new tax?
And what if it’s easy for a company to satisfy the conditions for receiving the benefit — perhaps by doing business the same way it did before? Should the collateral benefits — whether deliberately or by coincidence offsetting the burden of the new tax — prevent other countries’ imposition of pillar 2 tax on investment hub profits?
Recommended Citation
Avi-Yonah, Reuven S. "Pillar 2 and Specific Benefits for Multinationals." Tax Notes International 115 (2024): 507.