The Dutch Government has published the responses received on the draft bill for the implementation of the 15% Pillar 2 global minimum tax, the Minimum Tax Act 2024. As drafted, the global minimum tax would generally enter into force on 31 December 2023 and apply for the first time in respect of accounting years beginning on or after 31 December 2023. One notable response is from the American Chamber of Commerce in the Netherlands, which supports the global minimum tax, but highlights some issues. The executive summary provided in the AmCham response is as follows:
AmCham Netherlands supports your objective and efforts to create a global minimum tax on corporate profits based on a uniform set of rules and welcomes the opportunity to provide input with respect to the consultation document 'Conceptwetsvoorstel Wet minimumbelasting 2024 (Pijler 2)'
- In 2021, the Organisation for Economic Development and Co-operation ("OECD") reached a political agreement to adopt Pillar 2 within the Inclusive Framework based on a uniform set of rules. As a result of subsequent developments, however, it is unlikely that Pillar 2 will be adopted globally based on the same set of rules, as: (i) the US has adopted a different system for global minimum taxation; (ii) it is uncertain if and when agreement can be reached within the European Union; and (iii) little progress has been made in certain other significant jurisdictions;
- The Pillar 2 system was designed for global adoption and does not function properly if it is not aligned with other comprehensive systems for global minimum taxation. Misalignment between the US system and the proposed Pillar 2 rules gives rise to significant issues, particularly for US companies, including: (i) double taxation; (ii) jurisdictional disputes; and (iii) the undoing of tax incentives that are intended to address global environmental, health, and social challenges and to foster research and innovation;
- Furthermore, in its proposed form, the Undertaxed Profits Rule ("UTPR") presents a number of legal issues under international law, European Union ("EU") law and bilateral tax treaties, including the Dutch income tax treaty with the US, and should be reconsidered;
- We strongly encourage the Netherlands as a frontrunner on Pillar 2 to work within the OECD to procure (i) clear guidance on the alignment between the US system and the Pillar 2 rules, (ii) a reconsideration of the UTPR, (iii) the development of safe harbor rules for qualifying jurisdictions and operations, and (iv) the adoption of an effective dispute resolution mechanism, and to make sure that these issues are resolved prior to the adoption of Pillar 2 rules in the EU and/or the Netherlands.