OECD Pillar II Rules Implementing a Global Minimum Tax

The AHTCC, as part of a group of 30 national trade associations representing community development credits and financing tools, sent a letter urging the Treasury Department to protect investment in critical programs like the Housing Credit as the Organization for Economic Cooperation and Development (OECD) progresses on developing rules implementing a 15 percent global corporate minimum tax.

Novogradac published an article explaining how Housing Credits could be exempted from Global Tax Minimum calculations if the OECD clarifies guidance on credits from Equity Investments.

In May 2022, the Treasury commented on their efforts to protect tax credits, like the housing credit, as the OECD moves toward implementing Global Minimum Tax rules.

Assistant Secretary for Tax Policy Lily Batchelder said at the D.C. Bar tax conference May 5, 2022, that the Treasury has been “working with the OECD to clarify the treatment of general business credits under the minimum tax in the commentary to the model rules and in recent OECD public statements” and “are confident that the value of many of our general business credits is preserved under the OECD rules.” She said they “have established a process with the OECD for working towards additional clarifications. So, for example, we have heard concerns about the potential impact of other countries’ UTPRs for some taxpayers that invest in projects that give rise to the low-income housing tax credit, renewable energy credits, and the New Markets Tax Credit. But because of the way those investments are structured and accounted for, the income or loss and the income tax consequences of those investments typically will be excluded from the effective tax rate calculation, so those credits generally should not be impacted by UTPRs.”