28 Feb OECD two-pillar global tax framework at risk
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (IF) represents a significant overhaul of international tax rules, aimed at addressing the tax challenges arising from the digitalisation of the economy. The global tax solution seeks to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate. Over 130 countries were signatories to the initial deal in 2021. The final deal included several concessions, including by Ireland to cap the minimum tax threshold at 15%, instead of the initial wording that would have allowed tax rates under these rules to exceed it.
The framework is based on two separate pillars. Pillar One focuses on the reallocation of taxing rights over MNEs to the countries where their goods or services are consumed, regardless of the MNEs’ physical presence there. The Pillar’s scope covers MNEs with global turnover exceeding €20 billion and profitability above 10%. This pillar introduces a new nexus rule not tied to physical presence and allocates taxing rights through a formula that considers the revenue generated in each market jurisdiction.
Read more at https://inhouse-legal.eu/public-policy-regulations/oecd-two-pillar-global-tax-framework-at-risk/