Global minimum tax: OECD opens public consultation on income calculation and Panama holds a discussion forum
4 febrero 2022


On February 4, the Organization for Economic Co-operation and Development (OECD) opened 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 of multinational companies, especially large technology companies such as Amazon, Facebook or Google. The rules that these entities must implement to calculate their income and whether or not they are liable to pay the new minimum tax of 15% are developed. Interested parties may submit comments and observations to the document until February 18, to the following e-mail: [email protected]. On the other hand, Panama initiated a discussion space to implement this change with companies that have the Multinational Company Headquarters (SEM in Spanish) license in the country. 

The document under consultation contains the section of model rules on nexus and earning income, which will help define the income thresholds of large capitals with the objective of limiting compliance costs for taxpayers and tax administrations in the application of the new global minimum rate. The proposal contemplates that, in order to determine whether a corporate group meets the nexus test in a jurisdiction, the source-of-income rules will be applied. For this purpose, the market jurisdiction will be identified for a certain type of income: finished products, components, services, intangible goods, real estate, public subsidies and non-customer income.

The OECD also detailed how the public consultation process of all the rules that make up the two-pillar solution approved to address the tax challenges resulting from digitalization will be carried out. Regarding the contents of Pillar I, Section A is already open for comments. On the other hand, Section B will not be open for comments until mid-2022. The document with the model rules for Pillar II, which was presented in December 2021 and establishes the Global Anti-Base Erosion (GloBE) mechanism, has not yet been submitted for consultation. However, the organization assures that this will happen in the course of this month.

With this as a framework, Panama began to work on the future implementation of the tax. Thus, the Ministry of Economy and Finance (MEF) and the Ministry of Commerce and Industries (MICI) held a discussion with CEOs of different companies established in the country adhered to the regime of Multinational Company Headquarters (SEM) regarding the application of such global minimum tax. The Executive explained that this space was held to strengthen communication between the private and public sectors and thus seek solutions to maintain the country’s competitiveness and compliance with international standards.