Framework for international corporation tax reform embraced by 130 countries

Fully 130 countries and jurisdictions representing more than 90% of global GDP have signed up to the Organisation for Economic Co-operation and Development statement establishing a new framework for international tax reform leaving only nine members yet to join.

The two-pillar package aims to ensure that multinational enterprises (MNEs) pay tax where they operate and earn profits while adding certainty and stability to the international tax system.

Pillar one will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs including digital companies. It would re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits regardless of whether firms have a physical presence there.

Pillar Two seeks to put a floor on competition over corporate income tax through the introduction of a...