The OECD/G20 Global Minimum Tax and Dispute Resolution: A Workable Solution Based on Article 25(3) of the OECD Model, the Principle of Reciprocity and the GloBE Model Rules The authors wish to thank the anonymous peer reviewers for their comments as well as the editor-in-chief of the World Tax Journal, Professor Pasquale Pistone, for the opportunity to publish in this

Abstract

The implementation of the G20/OECD global minimum tax (“GloBE”) raises an immediate and practical challenge in terms of dispute resolution. On the one hand, the GloBE framework will require an unprecedented degree of coordination between jurisdictions with naturally a high potential for bilateral and multilateral disputes. On the other hand, it is foreseen that the GloBE rules will not be incorporated into a Multilateral Convention. Rather, the GloBE architecture will be exclusively transposed into domestic laws through so-called “model rules”. Therefore, at least in an initial phase, no ad hoc international binding dispute resolution mechanism will be available to solve GloBE disputes. In order to address this pressing challenge, this article proposes a readily workable solution to solve GloBE disputes without the need for a Multilateral Convention. The model advocated here consists in a (i) reinforced interpretation of article 25(3) second sentence of the OECD Model on the basis of a subsequent practice (article 31(3)(b) of the VCLT), (ii) a domestic dispute resolution mechanism incorporated into the model rules and mirroring article 25(3) of the OECD Model which would also (iii) apply to non-treaty situations on the basis of the principle of reciprocity and which would (iv) rely on the Convention on Mutual Administrative Assistance in Tax Matters. The authors find that the proposed framework is particularly in line with the object and purpose of the GloBE Model Rules which are to operate between jurisdictions as “mirror legislations” and in a synchronized fashion. This solution may also be combined with other mechanisms currently discussed to simplify and enhance the certainty of the GloBE framework for both MNE groups and tax administrations.