The enactment by the United States in August 2022 of a minimum tax on the global book earnings of large corporations (the book minimum tax, or BMT) raises the question of how the US minimum taxes – including the global intangible low-taxed income (GILTI), the base erosion and anti-abuse tax (the BEAT) and the BMT – interact with the global minimum tax, or GLoBE, agreed to by over 135 countries under an OECD framework. Particularly important are questions regarding the hierarchy in application of different regimes. In the context of multiple agreements for global minimum taxes, how to determine who gets priority of taxing rights?
To answer these types of questions it’s helpful to parse the technical differences between the different minimum taxes outlined in the GLoBE model rules and the US GILTI, BEAT, and BMT. The GLoBE model rules fail to provide clear guidance as to whether or not either GILTI or the BMT will provide the United States with the first right to tax the earnings of US companies’ foreign subsidiaries and whether enactment of the BMT will shield US companies from having other countries impose additional taxes on their domestic earnings. But there are good reasons to conclude that taken as a whole, the panoply of minimum taxes enacted by the United States are at least equivalent to the regime for taxing multinationals’ global earnings proposed by the OECD.Intertax