The Organization for Economic Co-operation and Development (OECD) on Thursday presented final guidance for governments on how to incorporate the new global minimum corporate tax into their code books, bringing the reform one step closer to being introduced next year.
In the most sweeping overhaul of cross-border tax rules in a generation, nearly 140 countries had agreed to apply a minimum 15 percent tax rate to multinational companies in 2021, by committing to a top-up tax on profits booked in countries with lower rates.
The reform, which the OECD expects will generate an additional $220 billion (€201 billion) in tax revenue worldwide, aims to update decades-old cross-border tax rules for the digital age, in which tech giants like Apple and Google can post low profits -tax countries like Ireland.
The OECD’s final guidance aims to clarify remaining details so that governments adopt tax laws in a consistent and coordinated manner to limit compliance costs for businesses and the potential for conflict.
The OECD said it specifically offers details on how other governments should recognize an existing U.S. minimum tax known as Global Intangible Low-Taxed Income, or GILTI, that covers patents, trademarks or copyrights.
The guidance, which is eagerly awaited by companies and tax advisors as well as tax administrations, also specifies details of the scope of companies covered and operational and transitional steps.
The US Treasury Department said the guidance would provide clarity while protecting tax incentives like the green tax credits included in the Inflation Reduction Act.
“The continued progress in implementing the global minimum tax represents another step in leveling the playing field for US companies,” said Assistant Treasury Secretary for Tax Policy Lily Batchelder.
She said it will also protect US workers and middle-class families by ending the race to the bottom in corporate tax rates.
The revision is gaining momentum ahead of implementation early next year after EU countries agreed in December to introduce the minimum tax in the 27-nation bloc.
Japan is preparing its national legislation and Switzerland will hold a referendum in June.
But the outlook is less certain for separate plans as part of the overhaul to reallocate 25% of the profits of the world’s largest multinationals for taxation to the countries where their customers are located, regardless of their physical location.
https://www.independent.ie/business/world/oecd-outlines-guidance-for-governments-on-introducing-15pc-tax-rate-42325553.html OECD outlines guidelines for governments to introduce the 15 percent tax rate
