OECD zverejnila Mnohostrannou umluvu o provadeni casti A Pilire 1

OECD published the Multilateral Convention to Implement Amount A of Pillar One

We have been talking about Pillar 2 a lot recently. For a change, we bring you update on its sibling – Pillar 1 dealing with reallocation of taxing rights to jurisdictions where company’s customers are located (applicable to the largest and most profitable MNEs).

OECD just published the Multilateral Convention to Implement Amount A of Pillar 1 (MLC).

Amount A of Pillar 1 introduces a reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable MNEs operating in their markets, regardless of their physical presence (with a corresponding obligation to relieve double taxation).

Amount A applies to MNEs with global revenue over EUR 20 billion and total profits greater than 10% of their global revenue. It reallocates 25% of the MNE’s excess profit (i.e. group profit in excess of 10% of its revenue) to jurisdictions where the MNE’s revenues are sourced (market jurisdictions). Certain exclusions apply (extractives, regulated financial services, defence and certain domestically oriented businesses).

For the MLC to enter into force, it needs to be ratified by at least 30 jurisdictions including the headquarters jurisdictions of at least 60% of MNEs currently expected to be within Amount A’s scope.

Existing bilateral tax treaties between parties to the MLC will continue to apply, but will be superseded by the MLC to the extent needed to permit the application of Amount A.

See HERE for further details.

If you have any questions, please contact the author of the article or EY tax team you regularly work with.

Author:

Karel Hronek