The Inclusive Framework on BEPS has published a new multilateral convention (MLC) to facilitate the implementation of the Pillar Two Subject to Tax Rule (STTR). As at 19 September 2024, the MLC had been signed by nine jurisdictions, and remained open for signature by other member countries.
The STTR aims to protect the right of developing Inclusive Framework members to tax certain intra-group payments where these are subject to a nominal corporate tax rate that is below the minimum rate, or where they are not taxed at all. The MLC is designed to help developing countries implement the STTR in their existing bilateral tax treaties.
Commenting on the new MLC, Mathias Cormann, OECD Secretary-General, said: ‘Currently, developing countries lose substantial revenues to base erosion and profit shifting by multinational enterprises. They are more vulnerable to these practices than developed jurisdictions. The imminent entry into force of the Multilateral Instrument will make a real tangible difference, by enabling developing countries to request the automatic inclusion of the Subject to Tax Rule in bilateral tax treaties with developed country Inclusive Framework members, ensuring that everyone benefits from the consensus-based solutions being developed to make the global tax system fairer and work better in an increasingly globalised and digitalised world economy.’
The Inclusive Framework on BEPS has published a new multilateral convention (MLC) to facilitate the implementation of the Pillar Two Subject to Tax Rule (STTR). As at 19 September 2024, the MLC had been signed by nine jurisdictions, and remained open for signature by other member countries.
The STTR aims to protect the right of developing Inclusive Framework members to tax certain intra-group payments where these are subject to a nominal corporate tax rate that is below the minimum rate, or where they are not taxed at all. The MLC is designed to help developing countries implement the STTR in their existing bilateral tax treaties.
Commenting on the new MLC, Mathias Cormann, OECD Secretary-General, said: ‘Currently, developing countries lose substantial revenues to base erosion and profit shifting by multinational enterprises. They are more vulnerable to these practices than developed jurisdictions. The imminent entry into force of the Multilateral Instrument will make a real tangible difference, by enabling developing countries to request the automatic inclusion of the Subject to Tax Rule in bilateral tax treaties with developed country Inclusive Framework members, ensuring that everyone benefits from the consensus-based solutions being developed to make the global tax system fairer and work better in an increasingly globalised and digitalised world economy.’
