In the face of the growth of multinational digital companies around the world, 138 countries led by the Organization for Economic Co-operation and Development (OECD)Organization for Economic Co-operation and Development) and the G20 I agreed to enforce the rules a inclusive taxrather than each economy setting its own standards in Tax regulation.
For this they established a Comprehensive framework Which has two pillars that will strengthen the international tax framework in the face of changes in business models, according to what the organizations revealed.
One of these pillars includesThe global minimum tax… (which) establishes a competitive lower bound on corporate tax which will ensure that multinational corporations, in every jurisdiction, will be subject to the rate of tax 15% minimum cashoutregardless of where they work, in order to ensure equal opportunities.”
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The 138 countries, among which Canada is not included, but there are developed and developing countries such as Germany, Spain, the United States, Italy, Japan, Mexico, the United Kingdom, Uruguay, Vietnam and Zambia, agreed to the tax base erosion and benefit shifting project (BEPS).
The Organization for Economic Co-operation and Development and the Group of Twenty declared that “the agreed approach based on two pillars plays an essential role in ensuring fairness and equality in our tax systems and strengthening the international tax framework in the face of the new and changing business models“.
A global minimum tax, the organizations said, “will prevent the proliferation of taxation of digital services and related similar measures, avoid double taxation and excessive tax compliance burdens, and increase the stability and legal certainty of the international tax system.”
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The first pillar provides that each party will exercise its own internal tax sovereignty, based on a minimum tax rate of 15% specified in the second pillar, which is a tax rate that will be applied to the wholesale distribution of digital goods. All of these should be implemented in the OECD guidelines before January 2024.
This Agreement was created on Meeting 15 of the overall frameworkafter 20 months of intense work and technical negotiations to detail the two pillars of the solution.