Technical Line - Accounting considerations for the global minimum tax under the Pillar Two GloBE model rules

Overview

Our Technical Line has been updated to enhance interpretative guidance on the Pillar Two Global Anti-Base Erosion (GloBE) model rules issued by the Organisation for Economic Co-operation and Development (OECD) that define the scope and mechanics of a 15% global minimum tax. Multinational entities with consolidated financial statement revenue of more than EUR750 million need to monitor legislation in the jurisdictions in which they operate. Several OECD member countries have enacted tax legislation based on the GloBE rules with effective dates as early as 1 January 2024. Additional countries have drafted legislation or announced an intent to implement legislation on the GloBE rules. The FASB staff said in response to a technical inquiry that it believes the GloBE minimum tax is an alternative minimum tax as discussed in ASC 740. Therefore, the tax an entity would pay under the GloBE rules would be recognized in the period it arises, and deferred tax assets and liabilities would not be recognized or adjusted for the estimated future effects of the minimum tax. As a result, companies will need to consider the effects of the GloBE minimum tax in the period that includes the date the laws are effective.