Mayer Brown has submitted comments to the public consultation document for the OECD’s proposed “Global Anti-Base Erosion (‘GloBe’) - Pillar Two.” 

Our commentary addresses the required carve-out of all regimes compliant with the BEPS substance-based standards and BEPS Action 5 on harmful tax practices.  We point out that the elimination of harmful tax regimes and alignment of substance and profits already achieve the goals of the GloBE proposal.   

We also recommend that the Unified Approach confirm that the Global Intangible Low-Taxed Income (“GILTI”) regime under the United States Internal Revenue Code Section 951A is a compliant regime and that no additional measures need to be taken by the United States with respect to Pillar Two. As a compliant regime, GILTI also ensures that payments to controlled foreign corporations (“CFCs”) of US multinationals are subject to a minimum level of taxation. We also recommend that Pillar Two include a carve-out for a return on tangible investments. 

Mayer Brown’s submission on Pillar Two follows our submission on Pillar One, which identified critical issues impacting the proposed expansion of nexus to consumer-facing businesses.  Pillar One and Pillar Two represent profound changes in the international tax landscape.

(Read our full commentary on Pillar Two and our previous commentary on Pillar One.)