OECD presents the rule for the minimum tax of 15% to multinationals

The OECD published detailed rules so that countries can transpose into their legislation the international agreement that allows a minimum rate of 15% to be applied in corporate tax to multinationals for the activity they have in any country and thus avoid tax evasion.

This tax that companies with revenues of more than 750 million euros that are established in more than one country will have to pay should generate an additional collection of US $ 150,000 million worldwide, the Organization for Cooperation and Development recalled in a statement. Economic Development (OECD).

This new device, whose effective application now depends on the speed with which each country incorporates it into its own legislation, is the result of the agreement reached in October by 137 jurisdictions around the world after a long process of years to fight against the practice of host a part of the profits in places that offer very low or even no taxation.

The regulations published now establish a coordinated system to define to which companies the minimum tax is applied, something that will ultimately depend on the modalities defined by the country where they have their headquarters. Consequently, for now there is no list of companies yet, although it is known that there will be thousands.

Public entities, international organizations, non-profit associations, but also pension funds and investment funds, including those dedicated to the real estate sector, will be excluded.

A mechanism is established to calculate the tax rate that multinationals effectively pay for each country in which they are established and set the amount of complementary tax in the event that they are not subject to a minimum rate of 15% there.

This difference will correspond, in general, to the country of the multinational, which in this way will not have the same interest as now in artificially housing a part of its profits in tax havens.

The agreement on the minimum corporate tax rate is one of the two pillars (the second) of the October international commitment on the taxation of multinationals.

The first pillar has to do with the obligation for companies in the digital sector to pay taxes in the countries where they operate, and not only where they declare their physical headquarters, on many occasions precisely for tax reasons.

The head of fiscal policies of the OECD, Pascal Saint-Amans, stressed that the standards presented this Monday “are essential for the development of the solution based on two pillars, since they convert the bases of the political agreement reached in October into applicable norms”.

For Saint-Amans, the consensus of the member countries of the so-called “inclusive framework” on these guidelines highlights “its commitment to a coordinated solution to address the challenges posed by an increasingly digitized and globalized economy”.

The next step for OECD, at the beginning of 2022, will be the presentation of the comments that these norms have received. Then, it will also be discussed how the new device will coexist with the United States’ Intangible Low Tax Global Income Regime.

An implementation framework will then be developed focusing on administrative, compliance and coordination issues.

In February, a public consultation will be held on the implementation and on a Taxable Rule on which the Inclusive Framework is also working.