(Finance) – The implementation ofinternational tax reform agreementto ensure that multinational corporations pay a fair share of taxes wherever they operate, is moving forward and is expected to take effect in 2024. This was stated by the Organization for Economic Cooperation and Development (OECD) in a draft update for the G20 finance ministers meeting in Indonesia later this week. The historic agreement to reform international tax agreements was reached by over 135 countries and jurisdictions in October 2021.
The first pillar of the two-track reform aims to reallocate 25% of the profits of the world’s largest multinationals for taxation in the countries where customers are located, regardless of the physical location of the companies. The second pillar aims to set an overall minimum tax rate of 15%.
“We have accomplished good progress towards implementation of a new taxation precisely under the first pillar of our international tax agreement – said the general secretary of the OECD Mathias Cormann – It is complex and highly technical negotiations in relation to some new concepts that fundamentally reform international tax agreements, to make them more equitable and function better in an increasingly digitalized and globalized world economy “.
“We will continue to work as quickly as possible to get this job done, but we will also take the time to get the rules right – he added – These rules will shape our international tax agreements for decades to come. It is important to make them work well. “
The technical work under the second pillar it is largely completed, with an implementation framework to be published later this year to facilitate implementation and coordination between tax administrations and taxpayers. All the G7 countries, the European Union, a number of G20 countries and many other economies have now planned plans to introduce global minimum taxation rules.