Most recent US proposal of 6 April 2021

In the beginning of April 2021, the U.S. has announced its willingness to modify its national legislation and align it with the OECD proposals, in particular with Pillar Two on the global minimum tax. To this end, Base Erosion and Anti-Abuse Tax (BEAT) could be replaced with a corresponding Pillar Two regulation based on the Undertaxed Payments Rule (UTPR). In addition to the implementation of Pillar Two measures, the accompanying Pillar One measures are important. They support, stabilize and complement the Pillar Two measures and serve to achieve the objectives.

The Blueprints set a solid foundation for the Pillar One goals. Global consensus is difficult because of the far-reaching measures; work on this can and must be done. However, the U.S. has declared that they cannot agree to measures that are directed against U.S. companies. Further, the proposed measures in their view are far too complex and bureaucratic, the complexity leads to a lack of consensus. They have proposed to revise or abolish ADS and CFB definitions and stressed the need for simplification.

According to the U.S. proposal, the scope should be limited to the largest and most profitable companies. There should be no specification of particular business sectors, only size and profitability (quantitative criteria) should be taken into account (so-called comprehensive scoping). In this way, the scope can be reduced and thus become more administrable. Exceptions should only apply if they are absolutely necessary for important reasons and should be of a fundamental nature. This solves exactly the two main points of criticism of Pillar One: scoping regime and business line segmentation. For this purpose, a clearly defined revenue and profitability threshold should be defined as a starting point. Moreover, the U.S. supports a proposal that eliminates or minimizes business line segmentation and regarding tax certainty the blueprint delivers a set of good proposals where details still need to be worked out. The United States also advocates for a binding dispute resolution and prevention procedure.