136 countries reach an agreement to distribute MNEs profits among customer-centric countries and introduce a minimum global tax rate of 15%

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International Business News: Following years of intense negotiations, an agreement was reached among 136 countries and jurisdictions (which includes all Oecd member countries and
MUMBAI: One can say that history has just been made in the arena of international tax. One of the major reforms finalised today at an Inclusive Framework meeting under the umbrella of the Organisation for Economic Co-operation and Development (Oecd) ensures that Multinational Enterprises (MNEs) will be subject to a minimum 15% global tax rate from 2023.Following years of intense negotiations, today an agreement on the Two-Pillar solution was reached among 136 countries and jurisdictions (which includes all Oecd member countries and G-20 countries). Four countries - Kenya, Nigeria, Pakistan and Sri Lanka - have not yet joined the agreement. The solution will be delivered to the G20 finance ministers meeting in Washington DC on October 3 and then presented at the G20 Leaders Summit in Rome at the end of October.From the very inception, India has been an active participant in these discussions. From India's revenue standpoint, Pillar One which grants taxing rights and allocation of profits of MNEs to countries where the customer base is, regardless of whether the MNEs have a physical presence, is of paramount importance. To illustrate, highly digitalised companies that do not require a physical footprint such as Google and Facebook have a huge consumer base in India.Under Pillar One, taxing rights on more than $ 125 billion are expected to be reallocated from around 100 of the world's largest and most profitable MNEs to market jurisdictions (countries where the customer base is), each year. This would ensure that these companies pay a fair share of tax wherever they operate and generate profits.Developing country revenue gains are expected to be greater than…
Lubna Kably
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