Legislative basis for global minimum tax
The date the global minimum tax will be introduced is approaching, and therefore the Czech implementation law is being prepared. The only legal act that has gone through the standard legislative process so far is an EU directive deriving from documents approved at the OECD level. Below we summarise the documents that will be decisive for the application and interpretation of the new rules.
EU directive
On 15 December 2022, the Council of the EU approved Directive 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large national groups in the EU. The directive was promulgated in the Official Journal of the EU on 22 December 2022. The member states are obliged to transpose the directive into their legislations by 31 December 2023 and apply the new rules to accounting periods starting on or after the same date.
The adoption of the directive builds on a series of documents prepared by the OECD Inclusive Framework, which is a platform of 135 countries that have committed to introduce minimum tax rules into their legislation or not to oppose their application by other states. The documents approved by the Inclusive Framework shall be applied in the transposition and interpretation of the EU directive.
GloBE rules
The basic document of the Inclusive Framework lays down the Global Anti-Base Erosion Model Rules, or GloBe rules, specifying the basic principles of the global minimum tax. The effective tax rate of a multinational enterprise group in each state in which this group operates should be compared to the agreed minimum tax rate of 15%. If the effective rate is lower, an obligation to pay a top-up tax shall arise.
Commentary on the GloBE rules and administrative guidance
The commentary and administrative guidance provide a uniform interpretation of the GloBE rules from the perspective of tax administrations and multinational groups. Both documents should be combined in the future into a consolidated version of the commentary.
Safe harbour rules
The main objective of the safe harbour rules is to provide for a temporary, simplified application of the minimum tax for certain situations in the first years of application of the new rules. This includes waiving penalties if the multinational group proves that it has made reasonable efforts to correctly apply the new requirements.
Examples
The document prepared by the OECD Secretariat contains several concrete examples that follow from the GloBE rules, the commentary, and the administrative guidance.
GloBe information return and tax certainty for GloBE rules
The GloBE information return is an overview of calculations of the effective tax and any top-up tax for individual states. The Tax Certainty document includes mechanisms to prevent and resolve disputes between member states that may arise in the application of minimum tax rules. The text of both documents is being finalised.
All of the above OECD materials can be found on the OECD website.