Weaver: Beyond the Numbers: Global Minimum Tax Explained



Covering the core elements of the global minimum tax envisioned by the world’s largest economies, Weaver’s international tax professionals provide information to multinational corporations.

Key points:

  1. The Organization for Economic Co-operation and Development (OECD) is considering some measures, including a global minimum tax to level the playing field between countries.
  2. In general, the global minimum tax will affect companies whose turnover exceeds 750 million euros. However, the tax liability rule may apply regardless of the amount of income.
  3. The overall minimum tax rate proposed by the OECD is 15%.
  4. The tax liability rate proposed by the OECD is 9%

“At its core, GMT provides a level playing field for multinationals,” Vince Houk, CPA, Managing Partner, International Tax Services.

In this episode of Weaver: Beyond the Numbers, host Tyler Kern discussed the proposed implementation of a global minimum tax with Vince Houk, CPA, Responsible Partner, International Tax Services at Weaver.

Houk explained that many OECD countries are considering certain measures, including a global minimum tax rate of 15% for large companies, as this would help “level the playing field”. In addition to competition between countries for tax revenues, many have seen the digital age hamper their ability to collect taxes. Together these two problems have led to low tax rates around the world and many countries are hungry for change. .

The Organization for Economic Co-operation and Development (OECD) is looking at three key rules to ensure countries receive their fair share of taxes:

  1. Income inclusion rule;
  2. Rule of under-taxed payments; and
  3. Subject to tax rule

The income inclusion rule and the under-taxed payments rule will effectively provide for a minimum tax rate for multinational enterprises, while the taxable rule will help ensure that a country’s tax base does not It is not eroded by certain deductible payments (interest, royalties, etc.) when the recipient country subjects the payment to a low tax rate.

While the rule of inclusion of under-taxed income and payments would affect multinational companies with global turnover exceeding 750 million euros, it is not clear whether the rule subject to tax will be subject to a threshold.

Under the current framework, a key consideration for multinational companies will be the effective tax rate which could, for example, impact a country’s ability to boost its economies through tax incentives.

These situations and many more are questions that the OECD must discuss and iron out before initiating the rule. While it’s not clear why OECD members are considering a 15% rate, it is evident that it will apply to many large companies and could have a significant impact on their tax bill.

Weaver tax professionals are known to help multinational clients achieve global business growth. Listen to the full episode to hear all of Houk’s ideas, and visit weaver.com for more thought leadership.

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