NEW DELHI: The Organisation for Economic Co-operation and Development (OECD) on Monday published detailed rules to assist in the implementation of a new global tax system, which will ensure multinational enterprises (MNEs) face a minimum 15% tax rate, starting from 2023.
Named as the Global Anti-Base Erosion (GloBE) rules, they seek to impose a top-up tax on profits arising in a jurisdiction whenever the effective tax rate in that particular jurisdiction is below the minimum rate.
The rules released by OECD prescribe the determination of excess profits, adjusted covered taxes, jurisdictional top-up tax percentage for every low-tax jurisdiction, substance-based income exclusion in computing the GloBE income.
With India being one of the 137 signatory to a new global tax regime, these guidelines can help the government ahead of preparation of budget and experts expect the Budget 2022 to provide the practical application of the template and give life to these rules. “The manner prescribed for the calculation of effective tax rate, top-up tax etc. would certainly increase the calculations of MNEs from a tax standpoint,” Amit Maheshwari, Tax Partner, AKM Global, said.