BUSINESS

Global minimum income tax. Until February 18, the Organization for Economic Co-operation and Development (OECD) put out for public consultation the document that develops Section A of the rules of Pillar I of the global agreement of the entity to face the tax changes resulting from the digitization of multinational companies. The rules that these entities will have to implement to calculate their income and whether or not they are liable to pay the new minimum tax of 15% are developed inside the document. The international organization communicated that they will launch in March 2022 a public consultation on the Model Rules of the multilateral application standard of the tax from 2023.

The document contains the section on model rules on nexus and sourcing of income, which are expected to be contained in Title 4 of the Model Rules for the Global Minimum Tax on Large Multinationals. This title will define the income thresholds for large capitals with the objective of limiting compliance costs for taxpayers and tax administrations. It thus includes provisions on how to calculate the income of entities, including the type of income whether from the sale of a physical or intangible asset. 

The proposal contemplates that, in determining whether a corporate group meets the nexus test in a jurisdiction, the source-of-income rules will apply. This will be done by identifying the market jurisdiction for a particular type of revenue: finished goods, components, services, intangible property, real estate, government grants and non-customer revenue.

Next steps

The public consultations promoted by OECD are in line with the construction of a model rule for member countries for the implementation of a 15% minimum global income tax on multinational companies. The OECD expects to have this year the definition of the general rules for member countries such as Mexico, Chile and Colombia to start the debate in the national congresses. The international organization estimates that the new global tax will be in force as from 2023.