Pillar Two is part of the OECD’s objective to address perceived concerns surrounding tax competition. The OECD established Pillar Two Global Anti-Base Erosion (GloBE) rules to help ensure that a multinational enterprise (MNE) with revenues of at least EUR 750 million – approximately $850 million – pays at least a 15% minimum tax rate in each country in which they operate.
While the U.S. has not enacted Pillar Two legislation, the U.S. group effective tax rate (ETR) of a MNE is tested to determine whether its ETR is below the 15% minimum rate to determine next steps. Pillar Two GloBE rules become effective on Jan. 1, 2024, and MNEs should be ready for compliance, as well as understand the transitional safe harbor available. For MNEs that will be affected by Pillar Two GloBE rules or are reaching the threshold, CohnReznick can help analyze the impact of those regulations and walk through next steps.