The Organization for Economic Cooperation and Development (OECD) announced regulations on December 20 to assist nations in implementing global international tax reform, which would require multinational businesses to pay a minimum 15% tax rate commencing from 2023.

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“The Pillar Two model rules provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy agreed in October 2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS,” it said in a statement.

The global minimum tax rule will apply to entities with revenues more than €750 million and is expected to generate an additional $150 billion in global tax revenues every year.

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The OECD model guidelines provide for a “top-up tax” to be levied on earnings in any jurisdiction where the effective tax rate, as established on a jurisdictional basis, is less than the minimum 15%.

According to the Paris-based organization, the Pillar Two model rules cover the treatment of group member acquisitions and disposals and include specific rules to cope with various holding structures and tax neutrality regimes.

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“The model rules released today are a significant building block in the development of a two-pillar solution, converting the foundations of a political agreement reached in October into enforceable rules,” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration.

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The fact that members of the Inclusive Framework were able to achieve an agreement on this extensive and complete set of technical rules reflects their commitment to a coordinated response to resolving the difficulties created by an increasingly digitalized and globalized economy, he noted.

The OECD has stated that it will issue commentary on the model guidelines in early 2022.

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A minimum tax agreement was achieved earlier this year by over 140 nations, representing more than 90% of global GDP, to levy a 15% minimum tax on major firms. This approach intends to put a stop to businesses hiding profits in low-tax countries.