General

The Organization for Economic Cooperation and Development (OECD) announced in Paris on the 8th that 136 countries and jurisdictions have agreed to reform the international taxation system and will levy at least 15% corporate tax on large multinational companies from 2023.

The OECD issued a statement on the same day that these countries and jurisdictions, which together account for more than 90% of the global GDP, agreed to implement a two-pillar international tax reform plan to deal with the tax challenges brought about by the digitalization of the economy.

The statement said that Pillar One of the plan will ensure that the profits and taxation rights of the largest and most profitable multinational corporations are more equitably distributed among countries. The new rules require multinational companies to pay taxes in the country in which they operate, not just where their headquarters are located. The second pillar is to set the global minimum corporate tax rate to 15%. Starting in 2023, companies with annual revenues of more than 750 million euros (approximately US$870 million) will apply this tax rate.

The statement said that after the implementation of the program, more than 125 billion US dollars of profits from about 100 large multinational companies around the world will be redistributed to countries. These companies will pay taxes fairly no matter where they operate and create profits.

The OECD emphasizes that the plan does not seek to eliminate tax competition, but imposes multilaterally agreed restrictions on competition. OECD Secretary-General Matthias Coleman said that the agreement reached this time is "a major victory for multilateralism and will ensure that the international tax system is suitable for a digitalized and globalized world economy."

According to the statement, the OECD’s goal is to sign a multilateral convention in 2022 to effectively implement the new international tax system in 2023.