Interaction Of OECD Pillar Two Rules with The U.S. GILTI And FDII Regimes (Pre-G7/ US Deal): “A Comparative and Policy Analysis”
Keywords:
GILTI, FDII, Pillar Two, GloBE, UTPR, QDMTT, Global Minimum Tax, BEPS, International Taxation, Tax Cuts and Jobs Act, Anti-Base-Erosion, Multinational Enterprises, Competitiveness, ComplianceAbstract
This paper explores the interaction between the OECD's Pillar Two Global Anti-Base Erosion (GloBE) rules and the U.S. international tax provisions introduced by the Tax Cuts and Jobs Act (TCJA) of 2017, namely the Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) regimes. As multinational enterprises (MNEs) face increasing tax transparency and coordination demands, the convergence and friction between Pillar Two and U.S. law raises questions of neutrality, competitiveness, and compliance. The analysis reveals that while GILTI and Pillar Two share similar aims, structural differences in tax base, rates, and jurisdictional application create fundamental differences thereby causing tension. Considering the UTPR rules, FDII may become a casualty of incompatibility under the GloBE model. The paper concludes with policy considerations for aligning U.S. law with global norms.
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