With the introduction of a global minimum tax, a significant change in international tax law is approaching, which international companies must prepare for.
International tax law is facing a profound reform that primarily affects internationally operating corporations. The introduction of a global minimum tax rate of 15 percent is intended to prevent corporations from shifting their profits abroad to evade their tax obligations, according to the law firm MTR Legal Rechtsanwälte, which also advises its clients in international tax law.
About two years ago, in July 2021, the finance ministers of the G20 countries agreed on a reform of international corporate taxation. The Federal Ministry of Finance has now presented a draft bill for the implementation of the reform on July 10, 2023. The new regulation is based on two pillars.
The first pillar primarily concerns the taxation of internationally operating digital corporations. They are to pay taxes in the country where their users are located and where the profits are generated. So far, taxation takes place only in the country where the company has its headquarters. Now, taxation rights are to be redistributed from the state of residence to market states where companies generate profits without being physically present. This redistribution should also render the introduction of national digital taxes unnecessary.
The second pillar is the introduction of a global minimum tax. This is intended to establish a globally valid minimum level of taxation. If the level is not reached in a country, additional taxation will occur. The system is aimed at ensuring more fairness in international tax law and preventing the shifting of profits to countries with lower tax rates.
A total of 138 countries have agreed within the framework of the OECD on a reform of international corporate taxation with an effective minimum taxation of 15 percent. The minimum taxation is to apply to internationally active companies with a turnover of more than 750 million euros. An EU directive corresponding to this is to be implemented in national law by the end of 2023.
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