On 20 December 2021, the Organisation for Economic Co-operation and Development (OECD) published the Pillar Two model rules for a two-pillar reform of international taxation to assist in the implementation of the landmark reform of the international taxation system that will To ensure that from 2023, multinational enterprises (MNEs) will be subject to a minimum tax rate of 15%.

The OECD/G20 Anti-Base Erosion Inclusive Framework previously planned to complete the work of the domestic legislative template by November 2021. The specific content of the template was officially announced today. The publication of the template means that the key technical details of the Pillar II scheme have been completed. Basically settled.

Hargent Tax has been continuously tracking and studying the OECD/G20 international tax reform in recent years, and is the only professional tax service organization in mainland China that has directly participated in the global opinion consultation on the G20/OECD international tax dual-pillar reform draft twice.

This article introduces the main content of the Pillar II legislative template, Hargent tax participation in and assisting Chinese-funded multinational enterprise groups and other relevant stakeholders to participate in international tax reform consultation and assistance, and proposes for Chinese-funded multinational enterprises to deal with the dual-pillar reform. Four work recommendations.

Outline of Pillar II Legislative Template

1. The role of the second pillar of the legislative template

The Pillar Two Legislative Template provides governments with a precise template to implement the two-pillar solution to the tax challenges posed by the digitization and globalization of the economy. For the content of the solution, please refer to this official account article "Bilingual in Chinese and English: Statement on the Dual Pillar Plan to Address the Challenges of Digital Taxation in the Economy". The solution has now received declarations of consent from 137 countries and jurisdictions under the OECD/G20 Anti-Base Erosion Inclusive Framework.

These provisions define the scope and mechanics of the Global Anti-Base Erosion (GloBE) rules under Pillar Two, which will introduce a global minimum corporate tax rate of 15%. The lowest tax rate will apply to multinational corporations with revenues of more than 750 million euros and is estimated to generate around $150 billion in additional global tax revenue each year

The Global Anti-Base Erosion (GloBE) rules provide for a harmonized tax regime designed to ensure that large multinational conglomerates pay this minimum tax on their income in each jurisdiction in which they operate. These rules create a tax whereby a "top-up tax" can be applied to any jurisdiction's profits as long as the effective tax rate determined by jurisdiction is below the 15% minimum rate.

2. The main content of the second pillar legislation template

The Pillar II legislative template will assist countries in incorporating the Global Anti-Base Erosion (GloBE) rules into domestic legislation in 2022. Templates provide a set of interconnected rule coordination systems that include:

The specific content structure of the legislative template

The specific content structure of the second pillar legislation template includes:

1範圍Scope

條款1.1反稅基侵蝕規則Scope of GloBE Rules

條款1.2跨國企業集團與集團MNE Group and Group

條款1.3成員(yuán)實體(tǐ)Constituent Entity

條款1.4最終控股母公司Ultimate Parent Entity

條款1.5排除的實體(tǐ)Excluded Entity

2征稅規定Charging Provisions

條款2.1收入納入規則的應用Application of the IIR

條款2.2收入納入規則下(xià)的補充稅分(fēn)配Allocation of Top-Up Tax under the IIR

條款2.3收入納入規則抵消機制IIR Offset Mechanism

條款2.4低稅支付原則的應用Application of the UTPR

條款2.5低稅支付原則補充稅稅額UTPR Top-up Tax Amount

條款2.6低稅支付原則下(xià)補充稅的分(fēn)配Allocation of Top-Up Tax for the UTPR

3反稅基侵蝕規則中(zhōng)損益的計算Computation of GloBE Income or Loss

條款3.1财務會計Financial Accounts

條款3.2反稅基侵蝕損益确定的調整Adjustments to determine GloBE Income or Loss

條款3.3國際航運收入的排除International Shipping Income exclusion

條款3.4主要實體(tǐ)與常設機構之間的損益分(fēn)配Allocation of Income or Loss between a Main Entity and a Permanent Establishment

條款3.5從穿透實體(tǐ)取得損益的分(fēn)配Allocation of Income or Loss from a Flow-through Entity

4有效稅額調整的計算Computation of Adjusted Covered Taxes  

條款4.1經調整的有效稅額Adjusted Covered Taxes

條款4.2有效稅額的定義Definition of Covered Taxes 23  

條款4.3有效稅額從一(yī)個成員(yuán)實體(tǐ)到另一(yī)成員(yuán)實體(tǐ)的分(fēn)配Allocation of Covered Taxes from one Constituent Entity to another Constituent Entity

條款4.4處理暫時性差異的機制Mechanism to address temporary differences

條款4.5反稅基侵蝕損失的選用The GloBE Loss Election

條款4.6申報後調整與稅率變化Post-filing Adjustments and Tax Rate Changes

5有效稅率與補足稅的計算Computation of Effective Tax Rate and Top-up Tax  

條款5.1有效稅率的确定Determination of Effective Tax Rate  

條款5.2補足稅Top-up Tax  

條款5.3基于實質的收入排除Substance-based Income Exclusion  

條款5.4額外(wài)的當前補足稅Additional Current Top-up Tax  

條款5.5最低限度排除De minimis exclusion  

條款5.6少數股權組成實體(tǐ)Minority-Owned Constituent Entities  

6公司重組與持股架構Corporate Restructurings and Holding Structures  

條款6.1集團合并與分(fēn)立中(zhōng)合并收入門檻的應用Application of Consolidated Revenue Threshold to Group Mergers aDemergers  

條款6.2加入或脫離(lí)跨國企業集團的組成實體(tǐ)Constituent Entities joining and leaving an MNE Group

條款6.3資(zī)産與負債的轉移Transfer of Assets and Liabilities  

條款6.4合資(zī)企業Joint Ventures  

條款6.5多母公司的跨國企業集團Multi-Parented MNE Groups  

7稅收中(zhōng)性與分(fēn)配制度Tax neutrality and distribution regimes  

條款7.1作爲穿透實體(tǐ)的最終控股母公司Ultimate Parent Entity that is a Flow-through Entity  

條款7.2.适用股息扣除制度的最終控股母公司Ultimate Parent Entity subject to Deductible Dividend Regime  

條款7.3适格稅收分(fēn)配體(tǐ)系Eligible Distribution Tax Systems  

條款7.4投資(zī)主體(tǐ)的有效稅率計算Effective Tax Rate Computation for Investment Entities  

條款7.5投資(zī)主體(tǐ)的稅收透明選用Investment Entity Tax Transparency Election  

條款7.6應稅分(fēn)配方法的選用Taxable Distribution Method Election  

8征管Administration  

條款8.1申報義務Filing obligation  

條款8.2安全港Safe Harbours  

條款8.3征管指南(nán)Administrative Guidance  

9過渡規則Transition rules  

條款9.1  過渡性的稅收Tax Attributes Upon Transition  

條款9.2.實質收入排除的過渡性照顧Transitional relief for the Substance-based Income Exclusion  

條款9.3處于全球活動初始階段的跨國企業集團的低稅支付規則适用排除Exclusion from the UTPR of MNE Groups in the initial phase of their international activity

條款9.4.對申報義務的過渡性照顧Transitional relief for filing obligations  

10定義Definitions  

條款10.1定義的術語Defined Terms  

條款10.2穿透實體(tǐ)、稅收透明實體(tǐ)和反向混合實體(tǐ)的定義Definitions of Flow-through Entity, Tax Transparent Entity, Reverse Hybrid Entity,  

and Hybrid Entity  

條款10.3實體(tǐ)與常設機構的位置Location of an Entity and a Permanent Establishment  

立法模闆的英文版全文，包括概述、常見問題以及關于規則應用的概況介紹，請訪問：https://oe.cd/pillar-two-model-rules。

2022年支柱二改革展望

支柱二的具體(tǐ)規則大(dà)部分(fēn)已經明确，未來還有模闆注釋、征管問題、應稅規則示範條款等後續工(gōng)作将得到進一(yī)步推進。2022年初，經合組織将發布有關立法模闆的注釋（Commentary），并處理與美國全球無形低稅收入（GILTI）規則共存的問題。随後将制定一(yī)個執行框架(implementation framework)，聚焦于與支柱二有關的征管、合規和協調問題。包容性框架還在制定應稅規則(Subject to Tax Rule)示範條款(model provision)及其執行的多邊工(gōng)具，并于2022年上半年公布。有關執行框架的公衆咨詢活動将于2022年2月舉行，有關應稅規則的咨詢活動将于2022年3月舉行。

Participation of Hargent in international tax reform

Hargent is the only tax professional service organization in China that has participated in the global consultation on the OECD international tax dual-pillar reform draft twice in recent years.

2. Provide professional support for tax reform related stakeholders

In addition to directly providing professional advice to the OECD, Huazheng Tax International Department has also coached and trained a number of Chinese-funded multinational enterprise groups in recent years on the draft rules of the dual-pillar reform, assisting clients in evaluating the potential impact of the draft dual-pillar reform on international taxation on the client’s group and industry. potential impact, and assist clients to provide professional feedback on the draft reform to the national fiscal and tax authorities and the OECD.

Hargent International Taxation Department preached the progress and rules of international tax reform at important conferences such as China Construction Industry Finance and Taxation Conference and Digital Tax Forum, and participated in the annual meeting of the Hong Kong Taxation Society to understand the changes in international tax reform policies in the jurisdictions where common shareholders such as Hong Kong are located. , to help all parties understand and correctly assess the potential impact of reforms.

Hargent Tax International Department also provides advice and support to tax authorities and professionals from colleges and universities who have consulting needs. Huazheng Tax also organized the translation and collation of about 400,000 words of international tax reform materials, which are important issues for relevant parties in international tax reform. The research provides solid data intelligence support.

With the support of the "Internet + Finance and Taxation" alliance (jointly established by China's leading digital enterprises), the International Department of Huazheng Taxation and the Institute of Digital Taxation of Renmin University of China jointly set up a digital tax column to provide readers with relevant tax rules and information on a global scale. The latest information on collection and management has been released to the 12th issue so far.。

3. Provide customers with advice on BEPS2.0 reform response

 Since 2020, Hargent has successively started to provide training on the OECD/G20 dual-pillar reform plan (also known as BEPS 2.0 reform) international tax reform for the headquarters and secondary units of many Chinese-funded multinational corporations in response to the tax challenges of economic digitalization , providing consultation on key professional topics, as well as providing overall consulting services for developing responses. These Chinese-funded multinational enterprise groups are mainly distributed in the fields of engineering and construction, energy and power, investment and trade.

Suggestions on Chinese-funded multinational companies responding to dual-pillar reforms

The impact of dual-pillar reform on Chinese multinational enterprises

The OECD/G20 dual-pillar reform program to address the tax challenges of the digitized economy is about to have a broad and profound impact on many multinational companies.

Pillar 1 balances in the short term the tax interests of the largest multinational corporations with their home jurisdictions and market jurisdictions. Regarding the impact of Pillar 1, the short-term impact is limited but the long-term impact is far-reaching. According to our calculations, among the approximately 100 companies in the world that are currently applicable to Pillar 1, there are approximately 8 Chinese companies (including Hong Kong, Macao and Taiwan regions). greatly increase. The impact of Pillar 1 in terms of rules is mainly due to the significant changes in the source of income rules to the traditional income tax principle based on the attributable profits of institutions.

At present, the threshold of 750 million euros for Pillar 2 is relatively low. Basically, all Chinese-funded multinational companies that need to submit country-by-country reports currently need to apply the Pillar 2 rules (including the domestic legislative template that has just been introduced). Under the Pillar II system, taxable rules and anti-base erosion rules constitute a new tax system, which is intended to plug the comprehensive tax avoidance loopholes of multinational companies and promote fair taxation of multinational companies around the world. The rules of Pillar 2 will have a significant impact on the global investment structure, related party transactions, tax planning, enjoyment of preferential policies, tax location and scale, jurisdiction and global tax burden of multinational enterprises.

Measures to be taken by Chinese-funded MNCs

To maintain tax efficiency and improve global competitiveness under the new rules, multinational corporations will need to respond aggressively. From now to 2023, when the world officially implements the dual-pillar rule, many multinational companies will carry out the assessment of the impact of the dual-pillar rule, focusing on the calculation of the tax burden of various jurisdictions around the world based on historical data or estimated data, and take measures to address the impact of the dual-pillar rule. Take proactive measures to adjust and optimize investment and business operation adjustment plans in a timely manner to ensure compliance when the new rules are officially implemented in 2023.。

3. Accurate calculation of tax reform indicators such as the actual effective tax burden

It is recommended to analyze and calculate key tax indicators and tax impacts, and calculate the actual effective tax rate ETR according to the country’s jurisdiction. It is necessary for the parent company to take the lead), calculate the location and scale of supplementary tax in the case of split ownership of investment equity at the ultimate holding parent company (UPE) and below, and calculate the tax impact of the adjustment of the results of low-tax related party transactions.

4. Develop and implement effective response plans

On the basis of financial data, organizational structure and business sorting, and tax reform index calculation based on the official tax reform plan and legislative template, the relevant results are analyzed in a combination of qualitative and quantitative methods, and the shareholding structure adjustment plan and related party transactions are proposed. Quantitative evaluation of the implementation effect of the response plan and transfer pricing arrangement optimization and other response plans, and implementation and promotion according to the planned timetable after decision-making.

Hargent Tax International Department will continue to track the progress of the dual-pillar reform and bring you the latest news introduction and professional analysis. Chinese multinational enterprise groups are also welcome to contact us regarding the assessment and response to international tax reform. We use our professional knowledge and acquired service experience to provide customers with comprehensive support.

責編 | 黃麗紅