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By Camila CALDERON, Partner Eduardo ISIDRO, Senior Manager, International Tax and Transaction Services, EY Luxembourg
The global tax landscape is in flux with the OECD’s release of the Pillar Two Model Rules and their ongoing adoption worldwide. These rules aim to ensure that multinational enterprises (MNEs) pay at least a 15% tax rate in each of the jurisdictions where they operate, targeting base erosion and profit shifting. As per the Model Rules, if the effective tax rate (ETR) in a particular jurisdiction is below 15%, the so-called “top-up tax” will be levied. However, entities within an MNE group may face a situation where, due to a combination of how the jurisdictional ETR is determined and how charging provisions are applied, tax liabilities...
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