Pillar Two and developing countries the STTR and GloBE implementation Heydon Wardell-Burrus
By: Wardell-Burrus, Heydon
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Material type: 
ArticleSubject(s): FISCALIDAD INTERNACIONAL | IMPUESTO DE SOCIEDADES | SEGUNDO PILAR (OCDE) | TIPO MÍNIMO GLOBAL | APLICACION | PAISES EN DESARROLLO
In:
Intertax v. 51, n. 2, February 2023, p. 118-133Summary: This article argues that the Subject to Tax Rule (STTR), which was noted as an ‘integral part of achieving consensus on Pillar Two for developing countries’, is unlikely to raise significant revenue for low-income countries. This is because it is within both the power and interests of another actor (either the developing country’s treaty partner, or the relevant MNE) to produce a better outcome for that actor under which the STTR will not apply. In order to retain support for Pillar Two from developing countries, the Inclusive Framework should explore mechanisms to provide tangible benefits to developing countries under the implementation of the Global Anti-Base Erosion (GloBE) Rules. This article considers three potential options which could be adopted as part of GloBE implementation and which do not require amending the GloBE Rules. These proposals allow developing countries to leverage the GloBE infrastructure (as well as the administrative capacity of revenue authorities in developed states) to improve the integrity of their tax bases as well as to raise additional revenue if they choose to do so.
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Resumen.
This article argues that the Subject to Tax Rule (STTR), which was noted as an ‘integral part of achieving consensus on Pillar Two for developing countries’, is unlikely to raise significant revenue for low-income countries. This is because it is within both the power and interests of another actor (either the developing country’s treaty partner, or the relevant MNE) to produce a better outcome for that actor under which the STTR will not apply. In order to retain support for Pillar Two from developing countries, the Inclusive Framework should explore mechanisms to provide tangible benefits to developing countries under the implementation of the Global Anti-Base Erosion (GloBE) Rules. This article considers three potential options which could be adopted as part of GloBE implementation and which do not require amending the GloBE Rules. These proposals allow developing countries to leverage the GloBE infrastructure (as well as the administrative capacity of revenue authorities in developed states) to improve the integrity of their tax bases as well as to raise additional revenue if they choose to do so.
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