The OECD has announced this Friday “an innovative fiscal agreement for the digital age” by which 136 countries will establish a minimum tax of 15% in companies since 2023 and to reallocate more than 125 billion dollars a year.
“The important reform of the International Tax System today in the OECD will ensure that multinational companies (EMN) are subject to a minimum tax rate of 15% as of 2023,” the organization has indicated in a statement in which he highlighted the ”
Historical agreement, agreed by 136 countries and jurisdictions representing more than 90% of world GDP. ”
The Agreement, has explained the OECD, will reassign more than 125,000 million dollars of profits from around 100 from the “larger and profitable” multinationals to countries around the world, “ensuring that these companies pay a fair share of taxes wherever they
Operate and generate benefits. ”
With Estonia, Hungary and Ireland adhered to the agreement, now it has the support of all OECD and G20 countries.
Four countries: Kenya, Nigeria, Pakistan and Sri Lanka, have not yet adhered to the agreement.
The Agreement has highlighted the OECD, “does not seek to eliminate fiscal competence, but it imposes on multilaterally agreed limitations and will cause countries to raise around 150,000 million dollars in new revenue.”
The agreement, based on two pillars, will be taken to the meeting of finance ministers of the G20 in Washington on October 13, and then to the G20 in Rome at the end of the month.
On the one hand, the pillar one will guarantee “a fairer distribution of benefits and fiscal rights among countries with respect to larger and more profitable multinational companies.”
For this, it will reassign some tax rights over the multinational companies of their countries of origin to the markets where they carry out commercial activities and obtain benefits, regardless of whether companies have a physical presence there.
Specifically, multinational companies with global sales greater than 20,000 million euros and a profitability greater than 10%, which the OECD considers “winners of globalization”, will be affected by the new rules, with 25% of the benefits above the
10% threshold will be reassigned to the market.
Thus, tax rights are expected over more than 125,000 million dollars in profits are reassigned to market jurisdictions each year.
Since the OECD they hope that income profits from developing countries are greater than those of the most advanced economies, such as proportion of existing income.
As for pillar two, it introduces a global minimum corporate tax rate of 15% that will be applied to companies with incomes exceeding 750 million euros.
The OECD estimates that it will generate around 150,000 billion dollars in additional global tax revenues annually.
The Secretary General of the OECD, Mathias Cormann, stressed that “today’s agreement will make our international tax agreements more righteous and function better.”
“This is a great victory for efficient and balanced multilateralism,” he continued, to add that “it is a powerful agreement that guarantees that our international tax system is adequate for its purpose in a digitized and globalized world economy.”
“Now we must work quickly and diligently to ensure the effective implementation of this important reform,” he concluded.
The countries aim to sign a multilateral convention during 2022, with an effective implementation of the measures in 2023. In this regard, the OECD indicated that the Convention will be the vehicle for the implementation of the agreed tributary law under pillar one, as well as for
The suspension and reform provisions in relation to all taxes on existing digital services and other similar relevant unilateral measures.
This, underlined the organization, “will bring more certainty and help relieve trade tensions.”
Regarding Pillar Dos, the OECD will develop model rules to incorporate it to national legislation during 2022 for its entry into force in 2023.