On Thursday 19 September, nine jurisdictions signed the new OECD convention implementing the Subject to Tax Rule (STRR) under Pillar Two of the international reform on the minimum taxation of multinational businesses (see EUROPE 13484/22). The purpose of this agreement is to protect the tax base of developing countries (see EUROPE 13270/23).
The signatories are Barbados, Belize, Benin, Cape Verde, Indonesia, the Democratic Republic of the Congo, Romania, San Marino and Turkey. Ten other jurisdictions - Belgium, Bulgaria, Costa Rica, Mongolia, Portugal, Senegal, Seychelles, Thailand, Ukraine and Uzbekistan - present at the ceremony have declared their intention to sign the convention.
The STTR is designed to guarantee a minimum level of taxation of cross-border payments and to avoid situations where income is taxed at very low rates or not at all due to differences between national tax systems. It allows developing countries to “tax back” on certain categories of income if they are taxed at a lower nominal rate. (Original version in French by Anne Damiani)