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Latest Compromise Text on Global Minimum Tax in the EU Allows Further Delay for Member States with Few In-Scope Groups — Orbitax Tax News & Alerts

The European Council Permanent Representatives Committee is meeting on 30 March 2022 to discuss, among other things, a revised compromise text of the Draft Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union. The Directive provides for the implementation of the 15% global minimum tax agreed to as part of the OECD's two-pillar solution for international tax reform.

As previously reported, a prior compromise text included provisions to allow an EU Member State to delay the application of the income inclusion rule (IIR) and the undertaxed payment rule (UTPR), the GloBE rules, if few in-scope groups are headquartered in the Member State. In particular, it provided that Member States in which no more than 10 ultimate parent entities of groups in scope of the Directive are located may elect not to apply the IIR and the UTPR for each fiscal year beginning as from 31 December 2023 to 31 December 2025.

Although not yet publicly available at the time of writing, the revised compromise text of the Draft Directive reportedly keeps these provisions but increases the number of ultimate parent entities to 12 and allows for a delay of up to 6 consecutive fiscal years beginning from 31 December 2023 (i.e., until 31 December 2029). After the 30 March 2022 meeting, the Draft Directive is to be further discussed during a meeting of the Economic and Financial Affairs Council scheduled for 5 April 2022.