INTRODUCTION | 3
Introduction Following years of detailed and intensive work and negotiations to bring the international tax rules into the 21st century, members of the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework) agreed on 8 October to the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. The Two-Pillar Solution will ensure that multinational enterprises (MNEs) will be subject to a minimum tax rate of 15%, and will re-allocate profit of the largest and most profitable MNEs to countries worldwide. Digitalisation and globalisation have had a profound impact on economies and the lives of people around the world, and this impact has only accelerated in the 21st century. These changes have brought with them challenges to the rules for taxing international business income, which have prevailed for more than a hundred years and resulted in MNEs not paying their fair share of tax despite the huge profits many of these businesses have garnered as the world has become increasingly interconnected. In 2013, the OECD ramped up efforts to address these challenges in response to growing public and political concerns about tax avoidance by large multinationals. Implementation of the 15 Actions of the BEPS package agreed in 2015 is well underway, but gaps remain. The current rules still allow large multinationals to earn significant income in a jurisdiction without paying corporate income tax there. New business models that rely heavily on intellectual property have made it easier for MNEs to shift profits to low-tax jurisdictions. Globalisation has exacerbated unhealthy tax competition. Now, 136 countries and jurisdictions, representing more than 90% of global GDP, have joined the Two-Pillar Solution establishing a new framework for international tax and agreed a Detailed Implementation Plan that envisages implementation of the new rules by 2023. A small number of the Inclusive Framework’s 140 members have not yet joined the Two-Pillar Solution at this time.
© OECD 2021
