DET3 input to OECD Pillar 2 public consultation

Early December 2019 was the due date to file observations to the OECD public consultation in respect to the Global Anti-Base Erosion Proposal (“Globe”) under Pillar II and a specific public consultation meeting on the topic happened on December 9th.

You can find the complete input DET3 contributed to that consultation in the reports section of our web, and you can see below the


We do agree with using the consolidated financial accounts prepared with ultimate parent accounting standards as starting point for this exercise.

This is objective audited information that is consistent and homogeneous. The possibilities to manipulate it are rather limited and it is a set aligned with the starting point of Pillar 1 final potential solution.

  • Our position relies on not taking in account any type of differences between accounting and tax.

    We do consider that the annual consolidated net result before taxes is the indicator that can better measure & reflect the economic capacity of a group for GloBE purposes over time.
  • Analyzing the 3 options to address or smooth the impact of timing differences, we consider that computing the annual worldwide (WW) Effective Tax rate (ETR) through the consolidated average corporate taxes accrued over a 3 years period would provide simplicity and ease execution and review. We, therefore, endorse this practical option.
  • We are supportive of a worldwide blending approach as the first option for the MNE group. Yet, we suggest giving the group the option to select the jurisdictional level as a second default option, if needed.
  • Two key benefits of the proposed approach for ETR formula determination:
  • Simplicity due to the removal of complex calculations, tracking and potential carry over by jurisdiction or entity in respect of taxable bases / tax attributes / Intragroup dividends & intercompany transactions.
  • The result would be based on an objective perspective of the group economic capacity.
  • We support considering qualitative / “behavioral” carve outs based on either a “Responsible & sustainable taxpayer index”, a “Substance index”, or a combination of both. These two (or mix of) indexes are industry agnostic and aligned with the main Pillar 2 objective of addressing remaining BEPS challenges.

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