EU member states reached agreement to implement at EU level the minimum taxation component, known as Pillar 2, of the OECD’s reform of international taxation. The ambassadors of EU member states decided to advise the Council to adopt the Pillar 2 directive, and a written procedure for the formal adoption will be launched. The Committee of Permanent Representatives reached the required unanimous support today.
The EU believes that:
"Effective implementation of the directive will limit the race to the bottom in corporate tax rates. The profit of the large multinational and domestic groups or companies with a combined annual turnover of at least €750 million will be taxed at a minimum rate of 15%. The new rules will reduce the risk of tax base erosion and profit shifting and ensure that the largest multinational groups pay the agreed global minimum rate of corporate tax".
It is fair to say that MNC taxpayers caught up in Pillar 2 and their Tax Advisors see significant additional compliance work and a long/complex implementation road ahead as the details of the legislation become clearer.