Certain large multinational companies may soon be subject to international tax changes including a minimum 15% global corporate income tax rate. The Organization for Economic Cooperation and Development (OECD) has announced that Canada and 135 other countries and jurisdictions of the OECD/G20 Inclusive Framework have finalized several key aspects of a framework intended to reform the international tax system. These details were included in a statement released on October 8, 2021 that confirms that certain multinational enterprises (MNE) will be subject to a minimum 15% tax rate and clarifies other details of the OECD's two-pillar approach to address tax challenges arising from the digitalization of the economy.
As these rules are intended to be effective starting in 2023, businesses should prepare for these upcoming changes by monitoring developments and the timing of legislative proposals in different jurisdictions. In addition, affected MNEs should model the potential impacts of these complex changes and evaluate conflicts with existing domestic rules to prevent double taxation or other inadvertent issues.
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