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May 31, 2024

Report on recent US international tax developments 31 May 2024

According to reports in the tax press, two more rounds of OECD administrative guidance regarding BEPS 2.0 global anti-base erosion (GloBE) are expected in 2024. Speaking at a Washington conference on 30 May, a Treasury official was quoted as saying the guidance "will include certain administrative simplifications and also some key structural rules which should generally be favorable" for US multinationals. He said that future administrative guidance is expected to cover issues addressed in past guidance, including the qualified domestic minimum top-up tax (QDMTT) safe harbor rules and hybrid anti-arbitrage arrangements.

The official also offered insight into current other ongoing Pillar Two-related projects including the GloBE information return that is expected to be exchanged between relevant jurisdictions in 2026. Other areas of discussion include advance tax certainty mechanisms and a new multilateral convention for addressing global anti-base erosion disputes.

Treasury Secretary Janet Yellen said the US government will not sign the Pillar One multilateral convention (MLC) until India and China agree to certain unresolved issues surrounding transfer pricing. Speaking on the sidelines of a 25 May Group of Seven meeting in Italy, the Treasury Secretary was quoted as saying: "India, in particular, has been a holdout and China has not really engaged very much in these negotiations at all."

The Pillar One Amount B provisions are intended to simplify and streamline 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 (Amount B approach). The OECD published the final report on Pillar One Amount B on 19 February 2024.

OECD Secretary General Mathias Cormann last week also echoed comments by Manal Corwin, the director of the OECD Centre for Tax Policy and Administration, saying the organization hopes to finish work on the MLC in time for it to be signed by the end of June.

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For additional information concerning this Alert, please contact:

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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