We appreciate the opportunity to submit our views.

For Japanese MNE Groups, it is extremely important that tax certainty is achieved when incorporating the GloBE Rules (hereinafter "the Rules") into domestic legislation. In other words, to ensure the effectiveness and appropriateness of the Rules, we believe it is vital to introduce robust dispute prevention and resolution mechanisms that bind jurisdictions to prevent and eliminate double taxation.

To achieve this, the timing that an IIR, a UTPR, or a QDMTT begins to apply should be internationally harmonised considering the diverse fiscal years of MNE Groups in each jurisdiction. For example, in Japan, the IIR is expected to be enacted into domestic law by the end of March 2023 and to be effective for fiscal years beginning on or after April 1, 2024. If there are jurisdictions in which the application of the IIR and UTPR will begin after January 2024, we request that such jurisdictions not apply the IIR and UTPR to MNE Groups whose UPE is in Japan (particularly corporations with a fiscal year ending December).

In addition, for tax certainty, the OECD/IF should devote its efforts to constantly update and improve guidance to enhance predictability for both tax administrations and MNE Groups.

We hope that the OECD/IF takes the following views into consideration to achieve tax certainty.

1. Definition of Dispute

While "Nature of disputes covered" is mentioned (Section 3.1.3), there is no mention of details of the disputes envisaged. It is important to clarify what types of cases may be covered. In theory, disputes related to the interpretation of rules or due to differences in fact-finding would fall under this category. From an MNE Group's perspective, we are concerned about the following situations:

• With respect to an IIR, it is assumed that top-up taxes may arise in jurisdictions where the Partially Owned Parent Entity (POPE) and the Ultimate Parent Entity (UPE) are located. Tax administrations in the jurisdictions where the POPE and UPE are located may not agree over the top-up taxes to be allocated to the jurisdiction where the POPE is located.
• In cases where top-up taxes are allocated to multiple jurisdictions based on a UTPR, tax administrations in these jurisdictions may have different views on the amount of such taxes and the basis of the allocation method.
• There may be a risk of double taxation if the UPE jurisdiction applies an IIR and a Constituent Entity (CE) jurisdiction applies a DMTT due to a disagreement over whether the DMTT is qualified.
• In jurisdictions where the QDMTT is applied, there are concerns about disputes over the basis of calculation if taxes filed by a local CE to a local tax administration based on local accounting standards and local audited figures exceed the amount expected by the tax administration in the UPE jurisdiction. It is essential, therefore, to publish guidance for tax administrations and MNE Groups to ensure that a homogeneous QDMTT is introduced in relevant jurisdictions, and to introduce a safe harbour that eliminates ETR and top-up tax calculations under the IIR in jurisdictions that introduced the QDMTT.
• We are concerned that differences of views on excess/deficiency, or accuracy of information in the GloBE Information Return (GIR) may result in the requirement to amend the GIR many times or require additional different information in jurisdictions.

It is crucial that, at least until the Rules are stably implemented, a robust and binding dispute resolution mechanism be provided with a broad scope of possible disputes, including ones arising from the interpretation of rules in the UPE jurisdiction and the operation of the IIR.

2. Disputes prevention mechanisms

2.1. Qualified Rules Status (paras. 6-8)

It should be clarified by which body, in what procedures, and with what frequency qualified rules status of an IIR, a UTPR and a DMTT is reviewed. The OECD should then publish and update qualified rules that have been adopted into domestic legislation in each jurisdiction in a timely manner. The establishment of a more formal multilateral peer review process with penalty for non-compliance should not be excluded as an option to ensure common interpretation.

In addition, even if a rule is deemed qualified, if there are deviations from the Rules, the information should also be made publicly available.

Furthermore, the scope of Covered Tax, the Eligible Distribution Tax System, Qualified Imputation Tax, and Qualified Refundable Tax Credit should be listed in the OECD, rather than relying on individual taxpayers' confirmation and interpretation.

2.2. Referral to the Inclusive Framework on BEPS (paras. 9-10)

We would like to request clarification on whether tax administrations in jurisdictions concerned are subject to the interpretation indicated by the IF after an inquiry related to the interpretation of the Rules and Commentary is referred to the IF.

To prevent disputes based on differences in interpretation of the Rules among jurisdictions, it would be effective for the IF to accumulate, anonymise, and disclose such examples to the public.

2.3. Binding certainty mechanisms (paras. 13-14)

As an example of a specific mechanism, a system similar to the Advance Pricing Agreement (APA) is mentioned, but no specific agreement items have been clearly proposed. If there are similar items, clarification should be required regarding the relationship with existing APAs. In addition, goals related to timelines should be established. In bilateral cases, one tax administration should collect and review the information and share this information with the corresponding administration to mitigate taxpayers' administrative burden. Furthermore, the calculation method and agreements regarding the information to be used should be published after anonymisation.

In the mid- to long-term, to enforce tax certainty, consideration should also be given to establishing a body or organisation that can appropriately coordinate the interpretation of the Rules among jurisdictions and ensure that there are no discrepancies in their application.

2.4. Actions after the GIR and tax filing

Regarding tax audits, even when requested by tax administrations in CE jurisdictions, the tax administration in the jurisdiction where the reporting entity (i.e., UPE or designated reporting entity) is located should respond to the other administrations centrally and directly, considering the need for such action. International coordination should also be ensured so that there are no differences in the application of the Rules in each jurisdiction or in tax audit policies.

Moreover, when amendments are made to tax returns, consideration should be given to the way of amendments so that they are reflected in tax returns for the current and following fiscal years rather than preceding-year tax returns. If preceding-year adjustments are made under unique rules in each jurisdiction, there is a risk of confusion in the calculation of overall GloBE income over the years.

3. Dispute resolution mechanisms

We strongly support the establishment of a dispute resolution mechanism through a multilateral convention (MLC). A mandatory and binding mechanism should be provided to prevent and resolute disputes between jurisdictions, such as international double taxation. Even if it is after the Rules have been introduced, the MLC should be developed and ratified by jurisdictions concerned. Until the MLC is ratified, as noted above, in addition to strengthening the peer review process, existing tax treaties and the use of competent authority agreements under the MAAC Convention should be possible options.