The introduction of the GloBE rules under Pillar Two has forced groups with split ownership chains and partially owned intermediaries to reconsider long-settled assumptions about how much low-taxed income can, in principle, be drawn into a global minimum tax base. While the core mechanics of the Income Inclusion Rule (IIR) and the Qualified Domestic Minimum Top-up Tax (QDMTT) are relatively straightforward at the level of wholly-owned subsidiaries, the position becomes considerably less transparent where low-taxed entities are held through partially owned intermediate companies. In such cases, the interaction between the GloBE Model Rules and the ownership structure raises two central questions:
- to what extent may an implementing jurisdiction that hosts a Partially Owned Parent Entity (POPE) collect Top-up Tax on a low-taxed constituent entity’s income; and
- does a residual “minority slice” of top-up tax remain structurally outside the Pillar Two net?
The present case study addresses this question in a stylized group involving an Omani intermediate parent, a low-taxed entity in Panama, and external minority investors, and seeks to reconcile the literal wording of the Model Rules with the approach suggested in the OECD Commentary and illustrative examples.
You can download this case study by clicking here.
