The proposal stretches far beyond just impacting tech companies and has the potential to impact all multinational businesses (albeit there is discussion that a few industries may be carved out, such as the extractives industry). Whilst Pillar 1 is expected to see a shift in where businesses are taxed, Pillar 2 focuses on the development of a set of rules to address instances where multinationals may be able to shift profit to jurisdictions where they are subject to no or very low taxation by introducing a worldwide minimum tax.
The CBI’s submission set out the following key points:
- It is essential to set out a framework for how the various elements of the GloBE proposal interact with each other (including which component will take precedence) and the interaction with Pillar One otherwise significant practical issues with the administration of the GloBE are likely to arise.
- A clear commitment is needed