Briefing

OECD says new multinational taxation system could yield up to US$100 billion annually

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The increase is equivalent to four per cent of governments’ current corporate income tax revenues. The OECD said 100 “large [multinational enterprise] groups” will account for over half the reallocated profit from proposals that allow a country to tax firms with sales within its borders, even if they don’t have a corporate presence. (The Logic)

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Talking point: In January, officials from 137 countries agreed to negotiate on the changes and finalize a deal by the end of the year. Today’s analysis incentivizes them to stay engaged in those talks, since most governments would see some revenue gains, with “low and middle-income economies” particularly benefitting. But the document also teases a bigger payoff for a second set of policies that ensure firms pay a minimum level of tax, in part by reducing rate differences between jurisdictions; countries like Ireland have been accused of providing illegal state aid to attract investment by reducing multinationals’ tax burdens. However, the end-of-year timeline only applies to the first set of changes; participating governments said last month the technical details of the second group of proposals still need to be worked out before adoption negotiations begin.