05/01/24

BEPS 2.0: Milestones Of Progress In 2023

As we enter 2024, it is good to take stock of where we are now on the BEPS 2.0 project. One can divide BEPS 2.0 into four elements, some of which are interrelated. They are: • Pillar 1 Amount A, which is a reallocation to market jurisdictions of profits, broadly comprising 25 per cent of profits above 10 per cent, for MNEs with revenue above €20 billion. Related to this is an agreement to hold back the proliferation of Digital Services Taxes and relevant similar measures. • Pillar 1 Amount B, which seeks to find a standard methodology for the determination of mark-ups on basic marketing and distribution rights. • Pillar 2 Global Minimum Tax at 15 per cent for MNE groups with revenue in excess of €750m. • The Subject to Tax Rule which provides an opportunity for countries to lift the effective tax rate on certain cross-border transactions to 9 per cent through changes to the treaty rules between two countries.