EU Turns Up the Charm to Keep Pillar Two Alive
The Big Picture:
With the 15% global minimum tax set to bite in 2026, Brussels suddenly finds itself in courtship mode. The target: Washington. Without U.S. participation, the OECD’s flagship Pillar Two deal risks looking more like a half-built bridge than a global standard, and European officials know it.
The Details:
“If the U.S. doesn’t come on board, global consensus can’t be a reality,” tax academic René Matteotti warned delegates at ITR’s Global Transfer Pricing Forum, International Tax Review reports. EU policymakers are therefore floating technical tweaks, think gentler top-up tax mechanics and simplified safe harbors, to make the regime palatable for Capitol Hill skeptics.
Across the Atlantic, policy shops are pitching their own fixes. Alvarez & Marsal’s latest Tax Policy Insights newsletter outlines a “Side-by-Side” model that would give U.S.-parented groups a full exclusion from Pillar Two while overhauling the current GILTI rules (A&M). The idea is gaining traction in G7 circles and could serve as the compromise Brussels needs.
Why It Matters / What They’re Saying:
The reaction was swift. EU tax officials fear that insisting on the existing rules could see multinationals route profits through more lenient jurisdictions, undermining the very revenue Pillar Two promises. Meanwhile, U.S. lawmakers argue that imposing a foreign-designed top-up tax on American companies without domestic buy-in is a political non-starter. Translation: unless both sides blink, years of negotiations could unravel just months before implementation.
Around the Tax World
• CSOs get a compliance wake-up call. Human-rights group Global Rights urged Nigerian civil-society outfits to sharpen their bookkeeping ahead of a January 2026 tax overhaul ( Daily Post ).
• India drafts clarity on PE & profit attribution. A new working paper proposes a statute-based formula to end the decade-long litigation slog over what constitutes a taxable presence, Bloomberg Law notes ( Bloomberg Law ).
• U.S. nixes global shipping carbon tax. The Trump administration’s pressure campaign shelved the IMO’s two-tier levy, estimated to cost American shippers $100 billion over seven years ( Institute for Energy Research ).
By the Numbers
Prime Number: $100 billion, the price tag U.S. officials say the shelved shipping carbon tax would have dumped on American carriers over the next seven years.
Looking Ahead
All eyes are now on the December ECOFIN meeting, where EU finance ministers will debate whether to tweak Pillar Two to lure the U.S. back to the table,or forge ahead without it.
Prepared by MyTax - mytax.com.ng