The World Bank has set out a framework to help countries evaluate their options for implementing multilaterally agreed global minimum taxation rules, urging them to "take concrete steps" in preparing for change. In a report published September 22, the World Bank examined the global anti-base-erosion (GloBE) rules under pillar 2 of the OECD-brokered, two-pillar global corporate tax reform plan. Around 137 jurisdictions in the OECD inclusive framework on base erosion and profit shifting reached a political agreement on the plan in 2021.
The report identifies four options:
- Do nothing which is not recommended
- Level 1 response. Introduce a Qualified Domestic Minimum Top Up Tax (QDMTT) and evaluate and if necessary, reform existing tax incentive regimes
- Level 2 response implement an Income Inclusion Rule (IIR) and an Undertaxed Payments Rule (UTPR) with a one-year deferral for the introduction of the UTPR
- Level 3 response implement broader corporate income tax reform including optimizing tax incentives to the GloBE rules (e.g., change nonrefundable credits so they fall within the definition of qualified refundable tax credits)
The report also sets out a good summary of the current state of play of countries implementing the GloBE rules including Canada, EU, Malaysia, Mauritius, New Zealand, South Korea, Switzerland, United Kingdom, and the United States.
The report mentioned that the World Bank plans on publishing further detailed guidance and training materials for the pillar 2 rules, in addition to guidance on GloBE rules and tax incentives, to help countries as they navigate the complex framework and implications for their tax systems.
"The World Bank stands ready to support developing countries in implementing the rules," the report says. "Such support can include regional seminars with deep dives on the rules, technical assistance to countries on impact assessments, analysis of policy options, evaluation of tax incentives, and legislative drafting."