Oct 05, 2021
Here's everything you should know about the global tax deal to be finalised on Oct 8
Come Friday, representatives from 139 countries, accounting for over 90 per cent of global GDP, will be huddled in Paris to finalise a global tax deal which will give rights to countries, including India, to tax large digital players including Google, Facebook, Netflix, and Microsoft. The outline of the framework was finalised in July and a consensus-based agreement is expected on October 8 for the deal to come into effect from 2023.
The OECD base erosion and profit shifting (BEPS) deal is intended to ensure that these large multinational digital entities pay more taxes in countries where they have customers or users regardless of where they operate from. Several internet companies operate out of low-tax jurisdictions, but do business in several others without having a physical presence and end up avoiding taxes. The deal will also ensure that countries will withdraw unilateral measures like equalization levy to tax these digital companies.
The second part of the two-pillar package deal will see countries setting a global minimum corporate tax of 15 per cent.
The meeting will be followed by a G20 finance ministers meet the following week, and a G20 summit at the end of October. Let’s take a look some of the key issues related to the deal