India sees ‘consensus’ by Oct. on OECD-G20 global tax deal

A day after joining the OECD-G20 framework for a global minimum tax, the Finance Ministry on Friday said significant issues including share of profit allocation and scope of subject-to-tax rules were yet to be addressed, and a ‘consensus agreement’ was expected by October.

A total of 130 countries on Thursday agreed to an overhaul of global tax norms to ensure multinationals pay taxes wherever they operate and at a minimum 15% rate.

The solution should result in allocation of meaningful and sustainable revenue to market jurisdictions, particularly for developing and emerging economies, the Ministry said in a statement. A majority of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting members (including India) on Thursday adopted a statement containing an outline of a consensus solution to address tax challenges arising from digitalisation of the economy, it added.

It comprises Pillar One — reallocation of additional share of profit to the market jurisdictions, and Pillar Two — regarding minimum tax and subject-to-tax rules.

Deloitte India Partner Sumit Singhania said the consensus would quicken ongoing efforts to reset the almost century-old international tax rules. It provides an objective definition for “largest (sales more than €20 billion) and most profitable (more than 10% global profitability) MNEs to be subject to new nexus and profit allocation rules,” he added.