G20: G20 Agreement on Two-Pillar-Approach including a Reallocation of Taxation Rights and Global Anti-Base Erosion Rules
Description
G20 Agreement on Two-Pillar-Approach including a Reallocation of Taxation Rights and Global Anti-Base Erosion Rules
The G20 finance ministers and central bank governors issued a communique stating their agreement on 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 EUR 750 million are taxed with a minimum rate of 15% in every jurisdiction they operate in. The G20 urges the OECD/G20 Inclusive Framework on BEPS to sort out the remaining issues and have finalized the design elements within the framework by the next meeting, which will be in October 2021.
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