The ambassadors of EU member states decided to advise the Council to adopt the Pillar 2 directive, and a written procedure for the formal adoption will be launched. The Committee of Permanent Representatives reached the required unanimous support today.
EU member states reached agreement to implement at EU level the minimum taxation component, known as Pillar 2, of the OECD’s reform of international taxation.
Effective implementation of the directive will limit the race to the bottom in corporate tax rates.
The profit of the large multinational and domestic groups or companies
with a combined annual turnover of at least €750 million will be taxed
at a minimum rate of 15%. The new rules will reduce the
risk of tax base erosion and profit shifting and ensure that the
largest multinational groups pay the agreed global minimum rate of
corporate tax.
I am very pleased to announce that we agreed to adopt the
directive on the Pillar 2 proposal today. Our message is clear: The
largest groups of corporations, multinational or domestic, will need to
pay a corporate tax that cannot be lower than 15%, globally.
Zbyněk Stanjura, Minister for Finance of Czechia
The directive has to be transposed into member states’ national law
by the end of 2023. This will still result in the EU being a
front-runner in applying the G20/OECD global agreement on Pillar 2.
Background
On 8 October 2021, almost 140 countries in the OECD/G20 Inclusive
Framework on Base Erosion and Profit Shifting (BEPS) reached a landmark agreement on international tax reform, as well as on a detailed implementation plan.
The reform of international corporate tax rules consists of two pillars:
- Pillar 1 covers the new system of allocating taxing
rights over the largest multinationals to jurisdictions where profits
are earned. The key element of this pillar will be a multilateral
convention. Technical work on the details thereof is ongoing in the
Inclusive Framework
- Pillar 2 contains rules aimed at reducing the
opportunities for base erosion and profit shifting, to ensure that the
largest multinational groups of companies pay a minimum rate of
corporate tax. This pillar is now enshrined legislatively in an EU
directive which was adopted unanimously by all member states voting in
favour
On 22 December 2021, the Commission therefore presented a proposal
for a directive which aims to implement Pillar 2 in a way which is
consistent and compatible with EU law.
Council of EU
© Council of the European Union
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article