On Dec. 14, a group of global real estate organizations, including Nareit, submitted comments to the OECD in response to its Public Consultation Document on its “Pillar Two Blueprint” regarding taxation of the digital economy.
Among other things, the OECD has been considering global minimum tax rules (including additional cross-border withholding taxes) for some time. Following the Nov. 8, 2019 OECD release of a Public Consultation Document: “Global Anti-Base Erosion Proposal (“GloBE”) - Pillar Two”, Nareit and other global real estate groups submitted initial comments. In its 2019 comments, Nareit focused on the risk that new minimum tax rules could inappropriately affect REITs if the special circumstances of REITs are not taken into account in the design of such rules. Nareit urged the OECD to incorporate specific rules for REITs in the design of the anti base-erosion proposal.
On July 27, 2020, Nareit submitted additional comments to the OECD regarding Pillar Two. These comments provided additional information regarding REITs and again recommended that the OECD incorporate specific rules for REITs in the design of the GloBE proposal.
The Dec.11, 2020 comments filed by Nareit and the global real estate organizations filed on Dec. 14 welcomed the OECD’s decision to not apply a minimum tax to tax transparent entities and urged the OECD to specifically reference REIT in the final rules as not being subject to such minimum tax. In particular, Nareit pointed out that more than 57% of OECD countries have REIT regimes in place, and additional OECD countries are considering the establishment of REIT regimes.
(Contact: Dara Bernstein at dbernstein@nareit.com)