What to Expect when You’re Expecting Pillar Two

Episode 01-2023 | After making slow but steady progress through most of the year, the pace of implementation of the global anti-base erosion (GloBE) rules accelerated dramatically in the last few weeks of 2022. South Korea has already adopted the GloBE rules, effective in 2024. Many other countries, particularly the United Kingdom and the countries of the European Union, are expected to follow suit shortly. In anticipation of the looming effective date for the GloBE rules, the OECD has released transitional safe harbor rules intended to reduce the compliance burdens on multinationals operating in “low-risk jurisdictions.”

But have no doubt, Pillar Two is coming. What are the major risks that U.S. companies should watch out for as the rules come on line? Will South Korea keep its 2024 effective date for the undertaxed profits rule (the UTPR), which could subject to U.S. income to the top-up tax earlier than expected? What are the practical implications of the ongoing debate on whether the UTPR is consistent with our existing bilateral tax treaties? How could the transitional safe harbors protect some companies’ U.S. income from being subject to GloBE for a couple additional years? And what guidance are we expecting from the OECD in the coming months?

Join us as our host Gary Scanlon interviews Marcus Heyland from the Economic & Valuation Services group of the KPMG Washington National Tax practice to explore these questions and more on the latest episode of Inside International Tax.