G20: Adoption of Two-Pillar-Approach including a Reallocation of Taxation Rights and Global Anti-Base Erosion Rules
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Adoption of Two-Pillar-Approach including a Reallocation of Taxation Rights and Global Anti-Base Erosion Rules
On July 1, 2021, the OECD and G20 published a statement regarding their two-pillar solution as part of the inclusive framework on Base Erosion and Profit Shifting (BEPS). The two-pillar solution seeks to implement effective taxation of the digital economy. Pillar One targets multinational enterprises (MNEs) with the threshold set at a global turnover of more than EUR 20 billion and a before tax profitability of 10%. To a certain extent, profit taxation rights are to be moved away from the MNEs physical location into the destination countries of its goods or services. The second pillar focuses on ensuring that all MNEs above a global revenue threshold of 750 million euros are taxed with a minimum rate of 15% in every jurisdiction they operate in. It is important to mention, that not all the Inclusive Framework members, namely only 131 of in total 139 member jurisdictions have agreed to the proposal as of July 5, 2021. A thorough implementation plan is expected by October 2021.
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