Announced by the Organisation for Economic Co-operation and Development (OECD) 130 countries and jurisdictions, which represent more than 90% of global GDP joined the statement establishing a new framework for tax reform.
Only nine of the 139 countries involved in the talks refused to sign up, including Ireland, Estonia, and Hungary. All of the G20 leading nations backed the plan.
The two-pillar framework published by the OECD, updates key elements of the century-old international tax system.
Under Pillar One, taxing rights on more than $100bn (£72bn) of profit are expected to be reallocated to market jurisdictions each year, this will ensure a fairer distribution of profits and taxing rights amongst countries with the largest MNE’s. This includes digital companies.
It would re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there.
