The tax reform package will include a reallocation of taxing rights – where companies pay tax wherever they conduct business – and a global minimum effective tax rate of at least 15 percent to tackle aggressive tax planning and stop the corporate tax “race to the bottom.”
The European Commission has said that the historic global agreement on digital economy taxation endorsed by G20 finance ministers will usher in a complete reform of the international corporate tax system.
On July 10, 2021, the G20 finance ministers endorsed a tax reform for multinationals agreed by the G7 finance ministers last month.
The tax reform package will include a reallocation of taxing rights – where companies pay tax wherever they conduct business – and a global minimum effective tax rate of at least 15 percent to tackle aggressive tax planning and stop the corporate tax “race to the bottom.”
European Commissioner for Economy, Paolo Gentiloni, said: “The G20 has today endorsed the unprecedented global agreement on corporate tax reform reached last week and now supported by 132 jurisdictions. A bold step has been taken, one that few would have thought possible just a few months ago. This is a victory for tax fairness, for social justice and for the multilateral system.”
“But our work is not done. We have until October to finalise this agreement. I am optimistic that we will be able in that time also to reach a consensus among all European Union Member States on this crucial issue.”
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com