Global minimum tax (Pillar 2)

Last month, FinHarmony held the first training session on the new Pillar 2 standard and global minimum tax.

Frédéric Petit, FinHarmony's expert consultant for over 15 years, co-hosted this event alongside Fabien Drouillard, a tax lawyer, who lent his expertise and commitment throughout the day. Many thanks to him for his invaluable contribution!

So why Pillar 2?

Pillar Two is an international initiative to introduce a global minimum tax for large corporations. The project was launched by the Organisation for Economic Co-operation and Development (OECD) to counter tax evasion and ensure fair taxation. The aim is to set a global minimum tax rate to avoid tax competition between countries, and to ensure that multinationals pay a fair share of taxes, regardless of where they are domiciled.

This scheme is closely linked to Country-by-Country Reporting (CbCR), an obligation designed to enhance the tax transparency of multinational companies. From June 2024, CbCR will become "public", increasing transparency requirements for these companies.

Principles

Pillar 2 is based on the determination, by tax jurisdiction, of an Effective Tax Rate (ETR). If this rate is below 15%, an additional tax will be due. This tax can be collected in different ways:

• Additional national tax levied locally (ICN): paid in the low-tax jurisdiction.
• Income Inclusion Rule (IIR ): paid by the ultimate or intermediate parent entity.
• Under-taxed profits rule (RBII): applied in the absence of an ITR at parent company level.

What impact is the introduction of this global minimum tax expected to have?

• Reducing tax avoidance: The global minimum tax aims to reduce opportunities for tax avoidance by discouraging companies from transferring their profits to low-tax jurisdictions.
• Tax fairness: It should also lead to a more equitable distribution of tax revenues between countries.

Objectives of FinHarmony's global minimum tax training course

Our training aims to :

1. Understand the differences in approach and terminology between tax specialists and consolidators.
2. Understand how to calculate the companies concerned and the results used to calculate the Effective Tax Rate.
3. Identify possible simplifications in the short and medium term.
4. Identify organizational impacts and repercussions on information systems.

Upcoming training sessions

If you're interested in this topic, we've scheduled two further training sessions for 2024, on September 20 and November 29.

For more information and to register, visit the page dedicated to this module.

Don't miss this opportunity to strengthen your skills and prepare for new international tax requirements with FinHarmony.

See our full training catalog.