During the G20 meeting in July 2021 in Venice, Italy, the finance ministers of the G20 countries reached agreement on the proposals of the Inclusive Framework of the Organisation for Economic Co-operation and Development (OECD) BEPS Project aimed at reducing international tax avoidance and limiting tax competition between states.
These proposals focus on two pillars: "Pillar I" or "unified approach", which assigns to market jurisdictions (nexus criterion) the attribution of profits of multinational groups; and "pillar two" or "GloBE", which seeks to establish a "global minimum tax" for multinationals with consolidated revenues above 750 million euros.
Here, we will comment only on "Pillar II" or "GloBE", due to the great interest that the implementation of the "global minimum tax" represents for tax policy makers, multinationals and tax advisors.
With the implementation of the "GloBE", an "income inclusion rule" is proposed to tax the profits of subsidiaries or affiliates of multinational groups in the jurisdiction of the parent company, where these profits have been subject to income tax at an effective tax rate of less than 15%.
Also, under the "income inclusion rule", if a subsidiary is subject to a preferential tax regime (in practical terms, a preferential tax regime is one that provides for a tax rate lower than the nominal income tax rate of the country), the profits that were not taxed under that preferential tax regime will be taxed in the jurisdiction of the parent company of the multinational group.