Global tax reform and minimum tax: OECD announces historic tax agreement between 136 countries

The Organization for Economic Cooperation and Development (OECD) announced last week that 136 countries had agreed on a global tax reform. According to OECD, this corresponds to more than 90 percent of global economic power.

Only Kenya, Nigeria, Pakistan and Sri Lanka refused to give their consent, even though they were also involved in the long process. The EU countries Hungary, Ireland and Estonia remained skeptical until the very end, but after making concessions they finally gave their OK to the first real global tax rules.

At its core, the new global tax system consists of two pillars:

  • "Pillar One" primarily includes an entirely new profit sharing concept for large corporations with annual sales of more than 20 billion euros and a profit margin of at least 10%. The focus is on a flat-rate global distribution of profits.
  • "Pillar Two" is the minimum taxation concept for "Multi National Entities" (MNE), which applies from an annual turnover of 750 million euros. This minimum tax rate will be 15 percent.

You can read all the details on the global tax reform and minimum tax here (unfortunately only available in German)

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