Organization for Economic Co-operation and Development’s two pillar plan to reform international taxation rules impact India in various ways. Critically Analyse (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The Organisation of Economic Cooperation Development issued a statement indicating consensus on a two-pillar plan to reform international taxation rules
· Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies.
· Pillar Two seeks to put a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases
Positive aspects
· The consensus also builds upon the recent G7 vow to bring fundamental changes to international tax rules.
· India had strongly advocated greater taxing rights to source or market jurisdictionsa stand shared by most developing countries.
· Given the insights Indian policy-makers have gained from participating in these deliberations, it is expected that the law-makers will unveil a refined and nuanced direct taxation law.
Negative aspects
· These are complex rules which presuppose applying formulas to data relating to global business revenue of the MNE group.
· Its application requires real-time information sharing and conjoint implementation by the tax-authorities across the globe.
· By design, the two pillars cover a small class of taxpayersMNEs which have a global turnover above 20 billion euros and net profitability above 10% for Pillar One.
· Accepting the two-pillar solution implies it being under pressure to undo its new international tax measures, particularly the equalisation levy.
