The UK’s implementation of OECD Pillar 2 rules

The UK remains on a fast track to implement the G20 global anti-base erosion (GloBE Pillar 2) rules developed by the Organisation for Economic Co-operation and Development (OECD) into domestic laws. The impact of the GloBE rules is significant. The International Monetary Fund estimates that Pillar 2 will raise global corporate tax revenues by 5.7%. The UK government estimates that Pillar 2 could raise £2.2bn a year by 2027-28.

Tax savings from low-tax business structures are expected to decline once (and if) the 15% minimum tax rate is introduced and the compliance workload of in-scope multinational enterprises (MNEs) is expected to increase as a result of new tax filing obligations underpinned by additional collation and data analysis requirements.

International framework

Addressing the tax challenges raised by digitalisation has been a priority of the OECD/G20 inclusive framework on base erosion and profit shifting (BEPS) since the publication...