Today, the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) released supplementary elements relating to the report on Amount B of Pillar One and guidance to ensure consistent implementation and application of the global minimum tax under Pillar Two.

A report on Amount B, which provides a simplified and streamlined approach to the application of the arm's length principle to baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries, was published on 19 February 2024 pending completion of design aspects, which have now been completed by the Inclusive Framework, allowing jurisdictions to begin with implementation.

The additional guidance published today includes:

• The definitions of qualifying jurisdictions within the meaning of section 5.2 and 5.3 of the Amount B guidance. These definitions will facilitate adjustments to the return calculated under the simplified and streamlined approach for tested parties located in those qualifying jurisdictions. The respective definitions are now incorporated into the Amount B guidance in the annex to Chapter IV of the OECD Transfer Pricing Guidelines.

• The definition of covered jurisdictions within scope of the political commitment on Amount B. That political commitment recognises that subject to their domestic legislation and administrative practices, members of the Inclusive Framework commit to respect the outcome determined under the simplified and streamlined approach to in-scope transactions where such an approach is applied by a covered jurisdiction and to take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach by a covered jurisdiction where there is a bilateral tax treaty in effect between the relevant jurisdictions. The approach developed to produce the list of covered jurisdictions facilitates tax certainty for jurisdictions most interested in implementing Amount B from 1 January 2025. Note that an expression of interest in applying Amount B does not necessarily mean that a jurisdiction will proceed to implement it.

Further work on the Pillar One package, including the Amount B framework, is ongoing as indicated in the Statement by the Co-Chairs of the Inclusive Framework on 30 May 2024.

Today, the Inclusive Framework also releases further guidance clarifying and simplifying the application of the global minimum tax and an overview of the streamlined process for recognising qualified status for the legislation of jurisdictions implementing the Global Anti-Base Erosion (GloBE) Rules.

• Administrative Guidance. The Inclusive Framework has released agreed Administrative Guidance on a number of key topics where consistency and simplifications were sought by Inclusive Framework members and stakeholders. This package of administrative guidance sets out simplified procedures that will allow MNE Groups to aggregate various categories of deferred tax liabilities for determining whether they have reversed within five year and therefore do not need to be recaptured. The administrative guidance also clarifies the methodology used to determine deferred tax assets and liabilities for GloBE purposes and further guidance on the allocation of cross-border current and deferred taxes and the profits and taxes on certain flow-through tax structures. Finally, the guidance provides specific guidance on the treatment of securitisation vehicles under a jurisdiction's domestic minimum top-up tax that will prevent these vehicles giving rise to volatile outcomes under the GloBE Rules. Together, this new package of guidance provides additional certainty and simplifications for stakeholders and will be incorporated in the Commentary to the GloBE Model Rules.

• CbCR Safe Harbour guidance. In December 2022, the Inclusive Framework agreed a significant simplification to the GloBE Rules with the Transitional CbCR Safe Harbour which is based on financial information used for purposes of Country-by-Country (CbC) Reporting. In December 2023, the Inclusive Framework had released further guidance related to the use of the Transitional CbCR Safe Harbour under the GloBE Rules which provided that intragroup payments need to be treated consistently in the payer and recipient jurisdiction. The Inclusive Framework released additional interpretative CbCR guidance on 27 May which also ensures the consistent treatment of those intragroup payments and avoids the need for further adjustments under the global minimum tax where a consistent treatment is applied in the first place.

• Qualified status. Under the "common approach" to the global minimum tax agreed by the Inclusive Framework in October 2021, Inclusive Framework members that adopt the GloBE Rules have agreed to implement and apply them in a consistent and co-ordinated way so as to minimise compliance and administration costs and the risk of double or over-taxation. In particular, the GloBE Rules incorporate an agreed rule order, which prevent a jurisdiction from levying top-up tax in respect of an MNE's low tax profits where those profits have already been subject to top-up tax under "qualified" rules in another jurisdiction. In light of the rapid adoption of the global minimum tax, the Inclusive Framework has agreed a streamlined process for recognising which jurisdictions have qualified rules. The Inclusive Framework Secretariat has now published on the OECD website a Question & Answer document summarising the main features of this Transitional Qualification Mechanism. This mechanism will provide jurisdictions with the certainty that their rules will be recognised as qualified by other implementing jurisdictions for a transitional period while a full legislative review is being undertaken and will provide MNEs with certainty as to which jurisdictions rules it must comply with in line with the agreed rule-order.

For further information, journalists are invited to contact Manal Corwin (+33 1 45 24 18 80), Director of the OECD Centre for Tax Policy and Administration, or ctp.communications@oecd.org.