{"id":11924,"date":"2021-07-03T00:00:00","date_gmt":"2021-07-03T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/03-07-2021\/oecd-g20-inclusive-framework-on-base-erosion-and-profit-shifting-beps\/"},"modified":"2024-08-02T18:20:04","modified_gmt":"2024-08-02T12:50:04","slug":"oecd-g20-inclusive-framework-on-base-erosion-and-profit-shifting-beps","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/03-07-2021\/oecd-g20-inclusive-framework-on-base-erosion-and-profit-shifting-beps","title":{"rendered":"OECD\/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS)"},"content":{"rendered":"\n

In News<\/strong><\/h2>\n\n\n\n

India has joined the <\/span>Organisation for Economic Co-operation and Development (OECD)<\/strong><\/span> and G20 Inclusive Framework <\/strong>tax deal of global corporate tax.<\/span><\/span><\/span><\/p>\n\n\n\n

About<\/strong><\/h2>\n\n\n\n
    \n
  • The deal seeks to reform international tax rules and ensure that multinational enterprises pay their fair share wherever they operate. <\/span><\/span><\/span><\/li>\n\n\n\n
  • Around 130 countries, representing more than <\/span><\/span><\/span>90 percent of global GDP<\/strong><\/span><\/span><\/span>, adopted the global corporate tax rate of at least 15 percent. <\/span><\/span><\/span><\/li>\n\n\n\n
  • The countries also agreed on a fairer distribution of<\/span><\/span><\/span> \u2018profits and taxing rights <\/strong><\/span><\/span><\/span>with respect to multinationals including digital giants such as Amazon and Google.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n

    Two Pillars of Framework<\/strong><\/h2>\n\n\n\n
      \n
    • The framework has<\/span><\/span><\/span> two pillars<\/strong><\/span><\/span><\/span>, one dealing with transnational and digital companies and the other with low-tax jurisdictions to address cross-border profit shifting and treaty shopping.<\/span><\/span><\/span><\/li>\n\n\n\n
    • The first pillar ensures that large multinational enterprises, including digital companies, pay tax where they operate and earn profits. <\/span><\/span><\/span>\n
        \n
      • Most such companies have so far been <\/span><\/span><\/span>paying low taxes by shifting profits to low-tax jurisdictions. <\/strong><\/span><\/span><\/span><\/li>\n\n\n\n
      • Under Pillar One, taxing rights on more than $100 billion of profit are expected to be reallocated to market jurisdictions each year.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n\n\n\n
      • The second pillar seeks to put a floor under competition among countries through a <\/span><\/span><\/span>global minimum corporate tax rate<\/strong><\/span><\/span><\/span>, currently proposed at 15%. This is expected to generate an additional $150 billion in tax revenues. <\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n
        \"\"\/<\/figure>\n\n\n\n

        <\/span><\/span><\/span><\/p>\n\n\n\n

        Image Courtesy: ET<\/span><\/span><\/span><\/p>\n\n\n\n

        Outcome<\/strong><\/h2>\n\n\n\n
          \n
        • If implemented, countries such as the Netherlands and Luxembourg that offer lower tax rates, and so-called tax havens such as the Bahamas or British Virgin Islands, could lose their sheen.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n

          Equalisation levy<\/strong><\/h2>\n\n\n\n
            \n
          • In 2016, India imposed an equalisation levy of 6% on online advertisement services provided by non-residents. This was applicable to Google and other foreign online advertising service providers.<\/span><\/span><\/span><\/li>\n\n\n\n
          • From April 1, 2020, the government started imposing a 2% equalisation levy on digital transactions by foreign entities operating in India or having access to the local market.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n

            Conclusion<\/strong><\/h2>\n\n\n\n
              \n
            • India will need to evaluate the revenue expected under the new rules against what it gets from the equalisation levy, besides examining their applicability.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n
              \n\n\n\n
              \n

              Base erosion and profit shifting (BEPS)<\/u><\/strong><\/span><\/span><\/span><\/p>\n

                \n
              • Base Erosion and Profit Shifting (BEPS) indicate tax avoidance strategies that Multinational Corporations (MNCs) employ for reducing their tax bases.<\/span><\/span><\/span><\/li>\n
              • Developing countries\u2019 higher reliance on corporate income tax means they suffer from BEPS disproportionately. BEPS practices cost countries USD 100-240 billion in lost revenue annually.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

                Source: <\/span>AIR<\/span><\/span><\/span><\/p>\n\n\n\n

                <\/p>\n","protected":false},"excerpt":{"rendered":"

                India has joined the Organisation for Economic Co-operation and Development (OECD) and G20 Inclusive Framework tax deal of global corporate tax..<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[26,46],"class_list":["post-11924","post","type-post","status-publish","format-standard","hentry","category-current-affairs","tag-gs-3","tag-indian-economy-related-issues"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/11924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=11924"}],"version-history":[{"count":5,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/11924\/revisions"}],"predecessor-version":[{"id":27162,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/11924\/revisions\/27162"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=11924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=11924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=11924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}