IISD Policy Brief: Inclusive Framework Agreement on the Global Minimum Tax: Recommendations to address stabilized fiscal conditions

By Nathalie Bernasconi-Osterwalder, Sarah Brewin, Suzy Nikièma, Thomas Lassourd, Alexandra Readhead | November 2021

On October 8, 2021, 136 countries agreed to a Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy (hereinafter referred to as the “statement”). The statement was an important step for the global initiative to address the tax challenges arising from a digitalized economy, led by the Organisation for Economic Co-operation and Development (OECD) since 2018. The reform includes two pillars. Pillar One creates a new taxing right for businesses selling goods and services digitally in countries where their users or consumers are physically located. Pillar Two ensures that all global profits of multinational companies are taxed at a minimum effective tax rate of 15%, beyond a carved-out amount of income equal to 5% of the company’s total expenditure on employees and tangible assets. This note focuses on Pillar Two and provides recommendations on how the OECD could design the model legislation and commentaries to effectively address the issue of stabilized tax incentives.

You can read the full policy brief here.