Interaction of IIR with CFC and Tax-sparing Provisions

Adoption of IIR (which is an extension of CFC rules) under Pillar Two is going to create conflict with the tax-sparing rules. Carve outs for activities with real substance, intended to accommodate abandonment of tax-sparing provisions may not be sufficient, as illustratively explained in the write-up.

https://www.southcentre.int/wp-content/uploads/2022/01/Tax-PB-22.pdf