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BTAX OnPoint: OECD/G-20 Statement on Two-Pillar Solution (1)

Oct. 12, 2021, 7:28 PMUpdated: Oct. 12, 2021, 9:28 PM

Officials from 136 countries agreed to a significant overhaul of corporate taxation last week, ending years of negotiations over how profits of the world’s largest multinationals are taxed.

The agreement, known officially as the October Statement by the OECD/G-20 Inclusive Framework on Base Erosion and Profit Shifting, offers a two-part solution to global tax reform.

The first part—known as Pillar One—provides a new taxing right for market jurisdictions. It authorizes them to tax multinational enterprises on their profits from business activities in markets where the MNEs may have no physical presence. Pillar Two is designed to ensure that large MNEs ...

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