Global Minimum Tax

Implementing the new GloBE rules and accounting for the top-up tax is proving to be a challenge and stakeholders have raised questions, including whether the top-up tax is within the scope of the income tax accounting standards under US GAAP and IFRS® Accounting Standards (ASC 740 and IAS 12, respectively) and the accounting for temporary differences.

Applicability

Multinational enterprises (MNE) with consolidated group revenue exceeding €750 million in at least two out of the last four years

Key impacts

• The GloBE rules subject large multinational groups to at least the minimum rate of 15% of income arising in each jurisdiction in which they operate. A top-up tax would arise only if a group pays an insufficient amount of income taxes at the jurisdiction level.
• The GloBE top-up tax is in the scope of ASC 740 under US GAAP.
• Under US GAAP, the GloBE top-up tax is accounted for as an alternative minimum tax. Companies should not record GloBE-specific deferred taxes or remeasure existing deferred taxes under local regular income tax systems to the GloBE rate. Instead, they should recognize the incremental effect of the GloBE top-up tax as incurred.
• Under IFRS Accounting Standards, the International Accounting Standards Board amended IAS 12, which provides a temporary mandatory exception from accounting for deferred tax and new required disclosures. 
  

Report contents

• Calculating the top-up tax
  
• Complexities
• Accounting for the top-up tax