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In an easy-to-read Q&A format, we outline the key issues to consider as Pillar 2 gains momentum.
In an article first published in Tax Notes Today International, Jason Yen, a Principal in the International Tax and Transaction services practice of Ernst & Young LLP’s National Tax Department in Washington, outlines key steps multinational companies can take to prepare for the OECD’s BEPS Pillar 2 project. Yen observes that the Pillar 2 tax focuses on revenue, not profits, so more companies than originally thought may be impacted. He notes that the Pillar 2 tax can apply to smaller companies, and even those that may not be profitable. He cautions that any company with operations in a country that has talked about adopting Pillar 2 needs to be paying attention, because the effect may not be limited to income generated in the country adopting the rules. Instead, the Pillar 2 rules may apply even outside of the jurisdiction in which they’re imposed, noting that profits generated in a country like the United States could be subject to these rules if other countries adopt them.
Barbara Kirchheimer, Assistant Director, Ernst & Young LLP, Tax Knowledge Services in Chicago has contributed to this article.
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Summary
It’s important for companies to monitor new guidance to determine the potential impact on their business.