Trending
Stocks
  • BRKA
    478723.46 USD 0.35%
  • T
    19.12 USD 0.16%
  • ADBE
    334.33 USD -0.44%
  • MMM
    129.05 USD 0.81%
  • AMZN
    93.42 USD -0.76%
  • AAPL
    148.12 USD -1.96%
  • NFLX
    285.57 USD -2.04%
  • NVDA
    162.72 USD -1.51%
  • TSLA
    182.88 USD -0.19%
  • SP500
    4026.52 USD -0.03%
  • FB
    184.02 USD -6.43%
  • MSFT
    247.51 USD -0.04%

OECD plans biggest overhaul of cross-border tax rules

The Organisation for Economic Co-operation and Development is planning the biggest overhaul of tax rules in a generation by 2024.

Nearly 140 countries have agreed to this change, all governed by the OECD, and the aim is to take more focus on huge technology companies such as Apple and Amazon, which can in some way circumvent tax laws by booking profits in low-tax countries. This means that much of the money goes out of the country where the companies operate.

All of this will stand on 2 pillars

The whole reform is built on 2 pillars, where the first one will be to make sure that 25% of companies’ profits are taxed in the countries where their clients are, regardless of where the physical location of the company is.

The second pillar, on the other hand, sets global minimum corporate tax rates of 15%. Which should also prevent larger differences between tax benefits in different countries.

OECD flag on blue digital world map with actual national borders

The aim is therefore to ensure that more countries benefit from the profits of huge multinational companies and to partially reduce the trend toward so-called tax havens. These are countries in which foreign companies are extremely tax-advantaged. The profits of these companies are not taxed at all or very little. Other advantages tend to be, for example, exemption from customs duties on imports of capital goods, etc.

Read also: Weekly macro report – surprises and mixed signals

Everything was supposed to start next year, but this was a very time-consuming plan, and we will not see the implementation of this change until 2024, because it is difficult to agree on such complex changes to tax laws in many countries.

OECD Secretary-General Mathias Cormann said in a statement.

“We will continue to work as quickly as possible to complete this work while taking as much time as necessary to get the rules right. These rules will shape our international tax agreements for decades to come.”

In most countries, we can expect to see changes to legislation to adopt this reform in 2024 as well.

Bruno is an Investment enthusiast with several years of experience in the industry. He enjoys following the latest news and technology trends...

Comments

Post has no comment yet.

Want add your comment? Sign up or Sign in