Following an agreement between the U.S. and the G7 countries on a global minimum tax in late June, the AICPA submitted a letter requesting guidance and making recommendations on Pillar Two framework co-existing with U.S. tax rules for U.S. multinational enterprises in a side-by-side system to the Organisation for Economic Co-operation and Development (OECD).
The letter, sent to officials at the OECD Center for Tax Policy and Administration on Thursday, Sept. 4, provides recommendations on the timing of the guidance, as well as on substance-based non-refundable tax credits, such as the Internal Revenue Code Section 41 research credit.
The G7 statement is a proposed agreement between the U.S. and other G7 countries to protect U.S. multinational enterprises from certain international tax rules that could make them pay extra taxes in other countries, doubling their tax burdens.
A side-by-side system “would fully exclude U.S. parented groups from the Income Inclusion Rule and Undertaxed Profits Rule in respect of both their domestic and foreign profits,” Treasury said in a statement on June 28.
Treasury also said the side-by-side system “would be undertaken alongside considering changes to the Pillar Two treatment of substance-based non-refundable tax credits that would ensure greater alignment with the treatment of refundable tax credits.” Learn more.