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04 October 2022

Australian Treasury releases consultation paper on BEPS 2.0 two-pillar global agreement

  • The Australian Treasury has released a consultation paper on the Organisation for Economic Co-operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) 2.0 two-pillar agreement.
  • The consultation paper poses 40 questions regarding design of the two-pillar global agreement and the Australian implementation of the Global Anti-Base Erosion (GloBE) Model Rules.
  • Submissions are due by 1 November 2022.

The Australian Treasury has released a consultation paper seeking submissions to help inform the Australian Government on how to design and implement the proposed OECD/G20 BEPS 2.0 two-pillar global agreement domestically – Global agreement on corporate taxation: addressing the tax challenges arising from the digitalisation of the economy.

The paper poses 40 consultation questions on how the two-pillar global corporate tax agreement would operate in Australia, and how Australian stakeholders view the benefits, challenges and impacts, including:

Design of the two-pillar global agreement

This section comprises 16 overview questions on both Pillar One and Pillar Two, focusing on the overarching design of the two-pillar multilateral agreement. These questions seek input on issues such as why there should be a global agreement on corporate taxation, the economic outcomes, estimated revenue impacts, and potential compliance costs/impacts for large multinationals.

Australian implementation of the GloBE Model Rules

This section comprises 24 questions on the GloBE Model Rules (Pillar Two) implementation in Australia, which address issues such as the potential mode of implementation, implementation timing, administrative provisions and safe harbors. Noteworthy issues include:

  • Whether Australia should implement a Domestic Minimum Tax (DMT), and if so, should a DMT only apply to multinational enterprises in scope of Pillar Two or include purely domestic businesses?
  • Whether franking credits should arise on top-up tax or DMT paid in Australia?
  • When should Australia implement the new rules? Are there advantages/disadvantages of Australia being an early/late adopter, noting that a critical mass of countries are likely to implement Pillar Two from 2024

Treasury is accepting submissions by 1 November 2022.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young (Australia), Sydney

Ernst & Young (Australia), Perth

Ernst & Young (Australia), Melbourne

Ernst & Young LLP (United States), Australia Tax Desk, New York

Ernst & Young LLP (United Kingdom), Australia Tax Desk, London

Document ID: 2022-1494

 

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