The OECD/G20 Inclusive Framework is a plan to have large multinational enterprises "pay their fair share of taxes" in the countries where they do business, rather than where they declare their profits.[1][2]
The Framework has two components, or "pillars." Pillar One would allocate taxing rights over large multinational enterprises to countries where the companies have a significant customer base, even if they have no physical presence there. Pillar Two implements a minimum 15% corporate tax rate on large multinational enterprises (with revenues above €750 million) to help prevent countries undercutting each other with low tax rates.[1][3]
After years of negotiations, 136 countries agreed to the Framework in 2021.[4] By 2024, around 40 countries had laws in place to apply the global minimum corporate tax rate (Pillar Two).[5][3] However, due to the complexity of implementation and disagreements over how profits should be allocated, consensus on implementation of Pillar One was not reached by the 30 June 2024 deadline.[4] Also, in early 2025 President Donald Trump ordered the U.S. Treasury to prepare options for measures against countries that have tax rules which disproportionately affect American companies. This put both pillars in doubt since they are not likely to go forward without the U.S., which is home to several of the world's largest companies.[6][4][7][8]
- ^ a b "G20 finance minister back deal to tax companies". BBC. 10 July 2021.
- ^ "OECD Inclusive Framework". Bloomberg Tax.
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