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In a much-awaited update, the OECD announced that 130 countries agreed to support a new two-pillar global tax solution, the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalisation of the Economy.
The two-pillar solution will see large companies -and not just tech giants -pay a minimum corporate tax rate of 15% in jurisdictions where they operate and earn profits, even if they are not headquartered there. Pillar one will ensure a fairer distribution of profits and taxing rights, while pillar two sets a global minimum tax rate.
Unless there are stumbling blocks, a detailed implementation plan, which will also iron out the remaining issues, is expected to be finalised by October 2021.
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