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International tax reform: the Multilateral Convention for the implementation of the first pillar is on track to be delivered by mid-2023

11/07/2022 – Progress is being made in implementing the international agreement on tax reform to ensure that multinational companies pay a fair share of taxes wherever they operate, according to an OECD report delivered to Ministers of Foreign Affairs Finance and Central Bank Governors of the G20 ahead of their meeting in Indonesia later this week.

Members of the OECD/G20 Inclusive Framework on BEPS have focused on the practical implementation of the historic agreement to reform international tax agreements reached by more than 135 countries, according to the OECD Secretary-General’s tax report and jurisdictions in October 2021.

The report includes a new Pillar One progress report, setting out a comprehensive draft of model technical rules to implement a new taxing right that will allow market jurisdictions to tax the profits of some of the largest multinational companies. (“first pillar”). This report will now be subject to public consultation until mid-August. The Inclusive Framework will then aim to finalize a new Multilateral Convention by mid-2023, for entry into force in 2024. This revised timeline, previously signaled by OECD Secretary-General Mathias Cormann and agreed by the Inclusive Framework , is designed to enable greater engagement with citizens, businesses and parliamentary bodies that will ultimately have to ratify the agreement.

“We have made good progress in implementing a new right to tax under the first pillar of our international tax treaty. These are complex and highly technical negotiations on some new concepts that fundamentally reform international tax regimes, to make them fairer and work better in an increasingly digitized and globalized world economy,” said the OECD Secretary-General. , Mathias Corman. “We will continue to work as quickly as possible to finalize this work, but we will also take all the time necessary to put the rules in place. These rules will shape our international tax arrangements for decades to come. It is important to do them well,” he said.

Technical work under the second pillar, which introduces an overall minimum corporate tax rate of 15%, is largely complete, with an implementation framework to be published later this year to facilitate implementation and coordination between tax administrations and taxpayers. All G7 countries, the European Union, a number of G20 countries and many other economies have now planned to introduce global minimum tax rules.

In addition to the update on the two pillars, the report provides an update on the progress made in implementing the transparency agenda. Latest data collected by the Global Forum on Transparency and Exchange of Information for Tax Purposes, hosted by the OECD, shows that information on at least 111 million financial accounts worldwide has been exchanged automatically between administrations worldwide in 2021, covering total assets of almost EUR 11. trillion. Later this year, the OECD will finalize a new crypto-asset reporting framework and amendments to the OECD Common Reporting Standard to ensure countries can continue to benefit from tax transparency standards.

To access the OECD Secretary-General’s Tax Report to G20 Finance Ministers and Central Bank Governors, go to -ministers-indonesia-july-2022.pdf

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