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The OECD has announced a far-reaching global agreement to its 'Two Pillar' proposal for international tax reform. The plans, which include a minimum in-country Corporation Tax rate of 15%, have now received the backing of all OECD members including G20 countries and the EU.

As part of ongoing global efforts to tackle large Multinational Corporations (MNCs), often technology companies sheltering profits in low tax jurisdictions, the OECD has followed up the Base Erosion and Profit Shifting (BEPS) initiative, with the 'Two Pillar' approach to global taxation of corporate profits.

This announcement comes after an agreement was finally provided by certain countries which feared for the loss of low tax rates that had historically attracted large MNCs, most notably Ireland. Ireland managed to secure a concession in the wording of the agreement, that saw the removal of the phrase "at least 15%" when discussing the minimum tax rate, amid fears that this rate could be increased in future.

It is anticipated that the scope for global tax planning using competitive tax rates will now be much narrower and countries can compete for MNC tax residency on a more level playing field.

Useful guides on this topic

BEPS & Diverted Profits Tax (for SME owners)
What is BEPS? What is Diverted Profits Tax? Will either of these affect me or my SME clients?

Digital Services Tax
The Digital Services Tax (DST) is a temporary mechanism to tax online sales pending a global solution. How does it work? Who is caught? 


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