130 countries and jurisdictions join new framework for international tax reform

On 1 July 2021, 130 countries and jurisdictions, representing more than 90 percent of global GDP, joined the Statement establishing a new framework for international tax reform.

The new two-pillar plan aims to reform international tax rules to ensure that large Multinational Enterprises (MNEs) pay fair taxes wherever they operate and earn profit. Hungary and the eight other members of the OECD Inclusive Framework, mainly European, have yet not joined the initiative, arguing that elements of the framework (such as the global minimum tax) would deprive them of the foreign investment incentives they rely on. 

Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies. Pillar Two seeks to put a floor on competition over corporate income tax through the introduction of a 15 percent global minimum corporate tax rate.

The remaining technical elements of the framework, including an implementation plan, will be finalised in October 2021. Actual implementation will take place in 2023.

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This newsletter provides general information and does not constitute tax advice.