21 January 2025

OECD releases new documents on GloBE Information Return

  • On 15 January 2025, the OECD released technical documents on the operation of the Global Anti-Base Erosion (GloBE) Model Rules
  • These documents include an updated GloBE Information Return (GIR) and related Administrative Guidance, together with documents regarding the exchange of data from the GIR between tax administrations.
  • Companies should review these documents and monitor further developments in the Inclusive Framework and relevant jurisdictions as they establish the processes needed to complete and file their first GIRs.
 

Executive summary

On 15 January 2025, the Organisation for Economic Co-operation and Development (OECD) released several documents on the operation of the GloBE Model Rules. With respect to the information reporting required under the GloBE Model Rules, the OECD released an updated template GloBE Information Return (GIR) document and accompanying Administrative Guidance (the GIR Guidance). The OECD also released a document containing the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (the GIR MCAA) and related Commentary. In addition, the OECD released the XML schema for automatic exchange of GIR information, together with a User Guide for tax administrations.

On the same date, the OECD also released Administrative Guidance on the application of Article 9.1 of the GloBE Model Rules, Administrative Guidance on a Central Record of Legislation with Transitional Qualified Status and an updated Q&A document on Qualified Status of jurisdictions' global minimum tax legislation; these documents are addressed in a separate EY Global Tax Alert.1

Detailed discussion

Background

In October 2021, the OECD released a statement reflecting the high-level agreement of Inclusive Framework member jurisdictions on core design elements of Pillars One and Two of the BEPS 2.0 project.2

Since the October 2021 agreement was reached, the Inclusive Framework has released a series of significant agreed documents on the global minimum tax under Pillar Two, including Model Global Anti Base Erosion (GloBE) Rules,3 Commentary to the Model GloBE Rules,4 guidance on GloBE Safe Harbors,5 and four packages of GloBE Administrative Guidance.6 On 25 April 2024, the OECD released the Consolidated Commentary to the Model GloBE Rules, which incorporates the three tranches of Administrative Guidance that were issued before the end of 2023.

These documents are intended to be used by countries to incorporate the Pillar Two global minimum tax rules into their domestic tax legislation. Chapter 8 of the GloBE Model Rules addresses administrative aspects of the GloBE Rules. It sets out an MNE Group's obligation to file a standardized information return to provide information on the tax calculations the MNE Group will make under the GloBE Rules.

On 20 December 2022, the OECD released a consultation document seeking stakeholder comment on the Pillar Two GloBE Information Return seeking stakeholder input.7 The consultation document, which did not reflect consensus views of the Inclusive Framework, provided information on the development of a standardized GIR and included Annexes setting out identified data points for Pillar Two compliance (including the calculation of GloBE tax liability) as well as accompanying explanatory guidance.

On 17 July 2023, the OECD released a document approved by the Inclusive Framework that contains an overview of the GloBE Information Return and how it is intended to operate, the template for the GIR itself, and explanatory guidance on the GIR.8 That document noted plans for further work to develop centralized filing requirements and appropriate mechanisms for automatic exchange of GloBE information, including a framework of Qualifying (bilateral and multilateral) Competent Authority Agreements, along with information technology solutions supporting exchange of information via a dedicated XML schema.

On 10 July 2024, the OECD released a consultation document seeking stakeholder comments on the draft user guide for the GloBE Information Return XML schema. The user guide, which did not reflect consensus views of the Inclusive Framework, provides the technical format for exchanging GIR information between tax administrations. It also is intended to facilitate domestic GIR filings where appropriate.

Updated GIR document and GIR Guidance

The updated GIR document released on 15 January 2025 contains a revised standardized template for the GIR. The GIR includes the information considered necessary for tax authorities to perform a risk assessment and to evaluate the correctness of a Constituent Entity's Top-up Tax liability under the GloBE Rules.

Like the original document, the updated GIR document states that the obligation to prepare a GIR is separate from the requirement to declare and pay taxes under a tax return. Each implementing jurisdiction will determine its tax return filing and payment procedures for the global minimum tax. While some jurisdictions may need additional data points beyond the data in the GIR for tax return preparation (e.g., converting Top-up Tax liability into domestic currency), the document indicates that jurisdictions should generally avoid requesting additional data related to the calculation of a Constituent Entity's Top-up Tax liability. The document also indicates that the standardized GIR template does not preclude a tax administration from requesting necessary supporting documentation.

As in the original document, the updated GIR document includes (i) a standard template for the GIR, (ii) a transitional simplified jurisdictional reporting framework and (iii) an approach for dissemination of the GIR. In addition, the updated GIR document includes further details on the notification requirements, as well as further details on recent developments and next steps.

GIR Guidance

In parallel to the updated GIR document, the OECD released the GIR Guidance providing more information on how to complete the GIR.

The GIR Guidance reiterates that MNE Groups should use a single basis to complete the data points in the GIR, noting that this means that the GIR should generally be completed based on the GloBE Model Rules and Commentary. An exception to this general rule is provided for situations where the QDMTT Safe Harbour applies (but not the Switch-off Rule), in which case the GIR for that jurisdiction should be based on the applicable QDMTT legislation. Another exception is provided for a jurisdiction or subgroup where only one jurisdiction has taxing rights under the GloBE Rules in respect of that jurisdiction or subgroup, in which case the GIR for that jurisdiction should be completed based on the legislation of the relevant jurisdiction. The GIR Guidance provides that in situations where the GIR for a jurisdiction or subgroup is based on the GloBE Model Rules, the MNE Group also must include information in the GIR on the differences between applicable domestic legislation and the Model Rules for certain key indicators. It further indicates that tax administrations may require additional reporting regarding these differences.

The GIR Guidance also recognizes that some jurisdictions are not able to accept information that does not exactly align to their domestic legislation. In this situation, the jurisdiction may institute additional domestic filing requirements (such as through a local information return or as part of a domestic tax return).

The new requirement for data regarding differences between domestic legislation and the GloBE Model Rules is reflected in the updated GIR template in a significantly expanded section 3.1. (Characteristics of the jurisdiction), which will need to be completed for each jurisdiction that has taxing rights in respect of a jurisdiction or subgroup. In other words, if multiple jurisdictions have taxing rights over a jurisdiction or subgroup, this section will need to be filled out multiple times to reflect the differences between those jurisdictions' domestic legislation and the GloBE Model Rules (or indicate where there is no deviation). The updated GIR template also requires Information regarding differences between domestic legislation and the GloBE Model Rules in the first section (MNE Group information) if the differences affect the range of the amount of GloBE Top-up Tax payable and in the second section (Jurisdictional Safe Harbours and Exclusions) if the differences affect safe harbor eligibility.

Changes to the standard GIR template and explanatory guidance

The structure of the GIR remains broadly unchanged — consisting of a general section (MNE Group Information), containing information for the MNE Group as a whole, and jurisdictional sections (Jurisdictional Safe Harbours and Exclusions and GloBE Computations) that contain more detailed information for each jurisdiction in which the MNE group operates. However, the updated GIR template includes a number of changes that are aimed at capturing data points related to the Administrative Guidance released since the original GIR template was released. In addition, some sections reflect more material changes — including the data points related to deferred taxes. Also, as discussed above, some sections have been updated to reflect the GIR Guidance.

In addition, the explanatory guidance regarding the GIR template that is included in the GIR document has also been updated. One significant update confirms that no detailed information is required for jurisdictions on which no jurisdiction has taxing rights under the UTPR or where the UTPR Safe Harbour applies with respect to that jurisdiction (such as a UPE jurisdiction that has not implemented the GloBE Rules and with respect to which the UTPR Safe Harbour applies).The GIR template document also includes a section on transitional penalty relief, reaffirming that jurisdictions should carefully consider the appropriateness of applying penalties or sanctions where an MNE Group has taken "reasonable measures" to ensure the correct application of the GloBE Rules or the QDMTT. Although this is not defined, the document further states that this should be understood in light of each jurisdiction's existing rules and practice and then provides examples of where penalties may be waived.

The updated explanatory guidance in the GIR document indicates that there is no requirement to file the GIR in every jurisdiction, but rather allows a single filing of the GIR — either by the Ultimate Parent Entity (UPE) or by a Designated Filing Entity (DFE) — in a jurisdiction that has a Qualifying Competent Authority Agreement (QCAA) in effect with the local jurisdictions as of the GIR filing deadline for the local jurisdictions. The exchange of GIR information under the QCAA should occur within three months. Constituent Entities of the MNE Group would however have a notification requirement to inform their local tax administration the jurisdiction from which it will receive the GIR under a QCAA.

The updated explanatory guidance in the GIR document details the information that is required to be provided to jurisdictions in the event that local filing is required, distinguishing between the various categories of jurisdiction (QDMTT-only jurisdictions, Implementing Jurisdictions and UPE jurisdictions that are Implementing Jurisdictions).

"QDMTT-only jurisdictions," a term introduced in the updated explanatory guidance, are the jurisdictions in which the MNE Group operates that have introduced a QDMTT and not the Income inclusion Rule (IIR) or Undertaxed-Profits Rule (UTPR). Provided that the Constituent Entity (or joint venture, joint venture subsidiary or stateless entity) is subject to tax in the QDMTT-only jurisdiction, the QDMTT-only jurisdiction will receive the general information in Section 1 of the GIR covering corporate structure and entity classification except the high-level effective tax rate and Top-up Tax payable information. The QDMTT-only jurisdiction will also receive Section 2 on safe harbors and exclusions and Section 3 on the detailed GloBE or QDMTT calculations for the jurisdiction or jurisdictional subgroup over which it has a taxing right.

Implementing Jurisdictions, which are jurisdictions that have implemented either the IIR or the UTPR (or both), will receive the general information in Section 1 of the GIR. If the Implementing Jurisdiction also has a taxing right under the IIR, UTPR (where the UTPR allocation percentage is more than zero) or QDMTT over a jurisdiction or jurisdictional subgroup, it will receive Section 2 on safe harbors and exclusions and Section 3 on the detailed GloBE or QDMTT calculations of the GIR in respect of that jurisdiction or jurisdictional subgroup in respect of which it has a taxing right.

An implementing jurisdiction that is home to the UPE of the MNE Group will receive the complete GIR.

GIR MCAA and Commentary

Although the default under the GloBE Model Rules is local filing of information with each jurisdiction, central filing of the GIR can reduce the compliance burden for MNE Groups by limiting the number of jurisdictions where Constituent Entities are required to file the GIR. Local filing is not required with respect to any Constituent Entity that is located in a jurisdiction that has implemented the GloBE rules or a QDMTT if the jurisdiction has a Qualifying MCAA in effect with the jurisdiction of the MNE Group's UPE or (DFE). Instead, central filing would allow the GIR to be filed with the tax administration in the UPE or DFE jurisdiction, which would exchange the relevant information with the tax administrations in the other jurisdictions.

The GIR MCAA is a qualifying agreement for these purposes. It is a multilateral agreement that provides for bilateral information exchanges on an automatic basis. Under the GIR MCAA, jurisdictions can exchange information on a non-reciprocal basis if they choose to do so. The GIR MCAA does not require a jurisdiction to have implemented the GloBE Rules or a QDMTT to implement an exchange relationship, but it must have the legal and operational framework in place to allow for filing and exchange of GIRs. However, a jurisdiction that has not implemented the GloBE Rules or the QDMTT would not be entitled to receive information under the MCAA.

The Inclusive Framework will conduct a peer review process with respect to the GIR MCAA, focused on jurisdictions' legal and operational frameworks allowing for filing and exchange of GIRs and will conduct a review the exchange framework five years after the first exchanges are made under the GIR MCAA.

Jurisdictions are not required to use the GIR MCAA and could use other forms of regional or bilateral agreements.

The GIR MCAA provides for maintenance and publication on the OECD website of a list showing the jurisdictions that have signed the agreement and the jurisdictions between which there is an active exchange relationship for GIR information.

GIR XML schema and User Guide

The XML schema, together with the accompanying User Guide, is designed to facilitate exchanges of GIR information under the GIR MCAA or another qualifying competent authority agreement. Jurisdictions also could use the schema domestically for gathering the required information from the Constituent Entities that file there.

Implications

The updated GIR document expands the data requirements for MNE Groups required to file the GIR. In particular, it requires MNE Groups to identify differences between the GloBE Model Rules and domestic Pillar Two rules for all relevant jurisdiction, determine the impact of those differences and report specified information regarding the impact of the differences on the GIR.

Companies should review the new documents related to the GIR and continue to monitor developments in the Inclusive Framework and relevant jurisdictions as they prepare to file their first GIRs.

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Endnotes

1 See EY Global Tax Alert, OECD releases new documents on GloBE rules and on qualified jurisdiction status, dated 17 January 2025.

2 See EY Global Tax Alert, OECD releases statement updating July conceptual agreement on BEPS 2.0 project, dated 11 October 2021.

3 See EY Global Tax Alert, OECD releases Model Rules on the Pillar Two Global Minimum Tax: Detailed review, dated 22 December 2021.

4 See EY Global Tax Alert, OECD releases Commentary and illustrative examples on Pillar Two Model Rules, dated 21 March 2022.

5 See EY Global Tax Alert, OECD/G20 Inclusive Framework releases document on safe harbors and penalty relief under Pillar Two GloBE rules, dated 21 December 2022.

6 See EY Global Tax Alerts, OECD/G20 Inclusive Framework releases Administrative Guidance under Pillar Two GloBE Rules: Detailed Review, dated 9 February 2023; OECD/G20 Inclusive Framework releases additional Administrative Guidance on Pillar Two GloBE Rules: Detailed review, dated 21 July 2023; OECD/G20 Inclusive Framework releases additional Administrative Guidance on Pillar Two GloBE Rules and update on Pillar One Amount A timeline, dated 22 December 2023; and OECD/G20 Inclusive Framework releases fourth tranche of Administrative Guidance on Pillar Two GloBE Rules, dated 28 June 2024.

7 See EY Global Tax Alert, OECD releases consultation document on Pillar Two GloBE Information Return, dated 21 December 2022.

8 See EY Global Tax Alert, OECD/G20 Inclusive Framework releases document on Pillar Two GloBE Information Return, dated 24 July 2023.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP, United States

Ernst & Young Belastingadviseurs LLP, Netherlands

Ernst & Young LLP, Canada

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

Document ID: 2025-0289