OECD COUNTRIES FINALISE AGREEMENT ON GLOBAL MINIMUM CORPORATE TAX
The Organisation for Economic Co-operation and Development (OECD) announced on 8 October that 136 countries joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. It updates and finalises a July political agreement by members of the BEPS Inclusive Framework to fundamentally reform international tax rules.
The Pillar Two of the Framework is set to introduce a global minimum corporate tax rate set at 15%. The new minimum tax rate will apply to companies with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually. Currently, shipping activities would be excluded from the BEPS Framework.
CLECAT raised concerns in July 2021 in a joint press release with FIATA that the overly broad definition of shipping (as stated in the commentary of Article 8 of the OECD Tax Convention) could lead to an exemption of shipping companies’ services in the areas of freight forwarding, customs, and logistics services. Services which are not directly related to the ship should fall within the scope of BEPS Pillar 2, including hinterland transport, storage, cargo handling, customs services, fiscal and insurance services, and all other ancillary services.
The two-pillar solution has been presented to the G20 Finance Ministers meeting in Washington D.C. on 13 October, then will be delivered to the G20 Leaders’ Summit in Rome at the end of the month. Countries are aiming to sign a multilateral convention during 2022, with effective implementation in 2023. The European Commission already announced that it is set to adopt by the end of the year a proposal for a Directive to implement the global minimum corporate tax in the EU.