Taxation challenges arising from the digitalisation of the economy, and the imbalances this has created in the current international tax system, have precipitated the need for a comprehensive and global effort to address. Consequently, the OECD/G-20 Inclusive Framework on Base Erosion and Profits Shifting (OECD IF) has agreed on a Two Pillar Approach.

Australian perspectives

MinterEllison were grateful to be invited by Bloomberg Tax’s International Forum to share their insights on the OECD Base Erosion Profit Shifting Pillar Two initiatives from an Australian perspective. Recent changes to Australia’s political landscape are anticipated to result in the swift implementation of Pillar Two, likely 2023.

This could have significant tax implications for Australian-headquartered significant global entities (SGEs), who will face increased compliance obligations, potential for greater international tax controversy exposure, and in some cases, reconsideration of their supply chains.

We anticipate that Australia will fully endorse Pillar Two’s enactment into its domestic legislation as soon as is practicable. This is particularly so as the Australian treasury and the ATO are understood to have deployed resources to monitor and implement Pillar Two.

Impacted multinational enterprises (MNEs) are strongly encouraged to consider the application of Pillar Two and proactively bolster their internal governance systems to ensure they are adequately resourced and functionally able to manage the additional compliance obligations arising from Pillar Two's operation success.

Read the full article for Bloomberg Tax Management International Forum Pillar Two: A Country by Country Perspective’.

Please get in touch if you need assistance navigating and preparing for Pillar Two’s enactment.