Income Inclusion Rule

From ACT Wiki
Jump to navigationJump to search

Tax - profit shifting - Global Minimum Tax - Organisation for Economic Co-operation and Development (OECD) - Pillar 2.


The Income Inclusion Rule is the primary calculation mechanism to ensure that large multinational entities are subject to a global minimum tax rate.

The tax jurisdiction of the ultimate parent collects top-up tax in relation to foreign subsidiaries with effective tax rates below the minimum rate of 15%.

Two interlocking rules
"The [Pillar 2] provisions are made up of the following two interlocking rules:
• Income Inclusion Rule (IIR): this is the primary calculation mechanism. The ultimate parent territory collects the top-up tax associated with foreign subsidiaries with an effective tax rate (ETR) below 15%.
• Undertaxed Payments Rule (UTPR): subsidiary territories collect the top-up tax in respect of a low-taxed overseas sister or parent company, where it is not captured by a parent territory IIR."
Graham Robinson, international tax and treasury partner PwC & Iain McDonald international tax and treasury director PwC - The Treasurer, Issue 4 2022 - December 2022, p40.

See also

External links