On Tuesday 3 October, the OECD/G20 Inclusive Framework on BEPS completed negotiations on a multilateral agreement to facilitate the implementation of the global minimum tax liability rule.
This multilateral agreement will protect the right of developing countries to ensure that multinational enterprises pay a minimum level of tax on a wide range of cross-border intra-group payments, including for services. These countries will therefore be able to tax certain intra-group payments where these payments are subject to a nominal rate of corporation tax of less than 9%. The tax liability rule will allow source jurisdictions - those from which the income in question arises - to levy tax in circumstances where the provisions of tax treaties would prevent them from doing so.
“The adoption of this new multilateral instrument builds on the Outcome Statement delivered in July towards full implementation of the global tax reform, and reflects how productively and positively the international community is working together to deliver solutions for developing countries”, commented Mathias Cormann, OECD Secretary-General, in a press release (see EUROPE 13221/23).
This agreement is an integral part of Pillar II of the OECD/G20 agreement aimed at reforming the international tax system. The Convention, which is now open for signature, represents a major step forward in completing the work under Pillar II.
More than 70 developing members of the Inclusive Framework are entitled to request the inclusion of this rule in their agreements with members of the Inclusive Framework.
Pillar I, the Multilateral Agreement, which allows jurisdictions to reallocate and exercise at the national level a right to tax a defined fraction of residual profits, constitutes the first pillar of this agreement and has yet to be finalised (see EUROPE 13253/33).
Read the Convention: https://aeur.eu/f/8vo (Original version in French by Anne Damiani)