The OECD released Commentary and illustrative Examples to the Pillar Two Model Rules (Model Rules) on 14 March 2022. This alert includes several highlights of what is, and is not, in the Commentary, plus some initial observations. The Commentary provides guidance on the interpretation and application of the Model Rules and is intended to promote a consistent interpretation of the Model Rules, which will help facilitate coordinated outcomes for both tax administrations and MNE Groups.
The Commentary attempts to explain the Pillar Two Model Rules in a more accessible way. It helps address some of the outstanding issues but, from a technical point of view, it does not go as far as we would have hoped to clarify a number of outstanding issues.