Squire Patton Boggs’ Jeff VanderWolk addresses the GloBE Model Rules that were issued in final form in December 2021. In the Model Rules, however, the backstop rule, now simply called the UTPR (not as an acronym but rather as a standalone name), is significantly different.
This allocates to UTPR jurisdictions an MNE’s global top-up tax amount that is not covered by one or more QIIRs on the basis of the MNE’s employees (by number) and tangible business assets (by net book value) in those jurisdictions. No economic or transactional connection is required between the UTPR taxpayers and the foreign affiliates earning the low-taxed income that gives rise to the top-up tax liability.
*This article was first published in Wolters Kluwer on October 26, 2022.