Global minimum tax. On October 11, the OECD/G20 Inclusive Framework published the text of a new multilateral convention regarding the 15% global minimum income tax on large companies. The text commits signatory countries to repeal nationally established digital services taxes and replace them with new versions adapted to the multilateral framework. The tax is expected to begin to be implemented gradually in the region as of the entry into force of the multilateral agreement, which will happen on January 1, 2024.
The Multilateral Agreement guarantees the repeal and prevents the proliferation of taxes on digital services -a mechanism used by States to tax foreign companies operating in their territory- and similar relevant measures, and ensures mechanisms to avoid double taxation. The convention calls for the elimination of these taxes to smooth the application of the global 15% Income Tax levy.
“The international community has been working closely to resolve outstanding technical issues in its landmark agreement to reform international taxation,” said OECD Secretary-General Mathias Cormann. “The text of the Multilateral Convention published today provides governments with the basis for coordinated implementation of this fundamental reform of the tax system.”
A significant portion of countries in the region are expected to join the 15% global income tax collection mechanism through reforms to their tax systems. Although the two-pillar solution will come into effect on January 1, 2024, it is estimated that its adoption at the international level will take time due to ratification by the countries.