The proposals articulated by the OECD were grouped into two pillars: Pillar 1 is directed at re-allocating profits and corresponding taxing rights to countries and jurisdictions where multinational enterprises have their markets. Pillar 2 contains measures to achieve a global minimum tax, in particular it seeks to provide jurisdictions the right to "tax back" low taxed profits.
In October 2019, the OECD released a consultation document dealing with Pillar 1 issues. In its comments on this consultation document, the German Insurance Association calls for the insurance sector to be exempted from the proposed new nexus and profit-allocation rules. Furthermore, the new rules should not impose addtional accounting obligations as this would be administratively burdensome. In particular, national generally accpeted accounting principles should be recognised for purposes of determining the amount of residual profit which is subject to reallocation under the proposed concept.
In November, the OECD released a second consultation document focussing on specific technical issues in respect of the Pillar 2 proposals against low taxation. In its comment letter to the OECD, the German Insurance Association calls for simplification options to be utilised in order to avoid unnecessary extra compliance burden resulting from the new rules. Therefore, accounting rules used by the ultimate parent company for preparing its financial consolidated statements should be recognised for purposes of computing the effective tax rate. In addition, multinational enterprises should be able to combine income and taxes from all foreign operations in determining the effective (blended) tax rate on such income ("global blending").