The GloBE Information Return Multilateral Competent Authority Agreement (GIR MCAA), published by the OECD, is crucial to implementing the global minimum tax provided for in BEPS Pillar Two of the Inclusive Framework. This instrument aims to establish a framework for international cooperation to exchange the necessary information for the so-called top-up tax calculation, ensuring that multinationals pay a minimum effective rate of 15% in all jurisdictions they operate.
The initiative responds to the increasing need for tax transparency and coordination among tax administrations to prevent tax base erosion and artificial profit shifting. The GIR MCAA does not merely work as a simple data transmission channel, but also establishes technical, legal, and operational standards that signatory jurisdictions must implement to ensure the quality, confidentiality, and proper use of the information exchanged.
Scope and Objectives of the GIR MCAA
The MCAA GIR primarily aims to enable the automatic exchange of GloBE Information Returns (GIRs), documents containing standardized and detailed information on the calculation of the effective tax rate for each jurisdiction in which a multinational group operates. This information will be annually transmitted among the competent authorities of the signatory jurisdictions.
The agreement specifies that the exchange will cover the jurisdiction of the multinational group and all those containing constituent entities. The information will be used solely for tax purposes, specifically to determine and verify the application of the global minimum tax and, where appropriate, to coordinate actions in cases of double taxation.
Structure and Content of the Information
The GloBE Information Return will include a set of data essential for determining the top-up tax, such as:
- Revenues and profits from each jurisdiction.
- Taxes paid or accrued, both current and deferred.
- Adjustments applicable under the GloBE rules, including substance-based exclusions.
- Calculation of the effective tax rate (ETR) per jurisdiction.
- Determined amounts of the top-up tax for each entity.
This uniform format will enable receiving tax authorities to independently verify the calculations and compare them with available local information, thus promoting consistency and detecting discrepancies.
Exchange Procedures and Safeguards
The agreement provides for a secure electronic transmission process that guarantees the confidentiality and integrity of the information exchanged. Jurisdictions must comply with high standards of data security and privacy protection, following guidelines similar to those for the automatic exchange of financial information (Common Reporting Standard).
Likewise, the GIR MCAA provides for mechanisms to suspend or terminate the exchange if a jurisdiction fails to comply with its confidentiality obligations or the limited use of information. This aspect is key to preserving mutual trust between tax administrations and the legitimacy of the system.
Transfer Pricing Relation
Although the GIR MCAA focuses on the global minimum tax, its interaction with the Transfer Pricing regime is undeniable. Minimum tax calculations require information that, to a large extent, depends on the allocation of profits among jurisdictions and the methodology used in related-party transactions.
Indeed, tax authorities will use the GIR data to compare it with the Transfer Pricing documentation filed by companies. Conversely, unusual margins or profits concentrated in low-tax jurisdictions can result in a more thorough review, leading to potential adjustments.
Consistency between GloBE information and Transfer Pricing information will be crucial to minimize the risk of disputes or double taxation. Companies must therefore align their Transfer Pricing policies with their GloBE reports, integrating compliance management in both areas to ensure consistency and reduce tax risks globally.
Implications for Multinational Companies
The entry into force of the GIR MCAA entails that multinationals must:
- Establish internal systems to collect, consolidate, and report the information required under the GloBE rules.
- Review their tax structures and Transfer Pricing policies to ensure that the profit allocation is consistent with economic reality and complies with the global minimum tax.
- Coordinate with subsidiaries and local advisors to ensure the correct interpretation and application of the rules in each jurisdiction.
Non-compliance or inconsistent reporting can result in audits, penalties, and tax adjustments in multiple countries, so proactive preparation is essential.
Source: OECD