OECD sees global corporate tax reform on track for 2024

Secretary-General of the Organization for Economic Co-operation and Development (OECD) Matthias Cormann speaks during a press release after the opening ceremony of the OECD meeting at the Itamaraty Palace in Brasilia, Brazil, June 21, 2022. REUTERS/Adriano Machado

The largest reform of cross-border tax rules in a generation is now on track to take effect in 2024, the Organization for Economic Co-operation and Development said Monday, in a draft update for G20 finance ministers.

The changes, sponsored by the Organization for Economic Co-operation and Development and approved by nearly 140 countries last year, aim to better account for the emergence of big digital companies, such as Apple (AAPL.O) and Amazon (AMZN.O) that can reap profits in low-income countries. taxes.

The first pillar of the two-track reform aims to reallocate 25% of the profits of the world’s largest multinational corporations to tax in the countries where their customers are located regardless of the companies’ physical location. The second pillar aims to establish a global minimum corporate tax rate of 15%.

Both pillars were originally slated to be implemented next year, although it has always been seen as too ambitious given the difficulty of agreeing to complex changes to tax laws in many countries.

“We will continue to work as quickly as possible to get this work done, but we will also take the time necessary to get the rules right,” OECD Secretary-General Matthias Kormann said in a statement.

“These rules will shape our international tax arrangements for decades to come,” he added.

The OECD said in a report to G20 finance ministers this week in Bali that the new Pillar 1 timetable set a strict mid-2023 deadline for signing the multilateral legal framework underpinning it until it takes effect in 2024.

Meanwhile, he said most countries are planning to legislate to adopt a global minimum tax rate so that it will also come into effect in 2024.

(Reporting by Lee Thomas; Editing by Tomasz Janowski)

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