132 countries and jurisdictions, representing over 90 percent of global GDP, joined a new two-pillar plan to reform international taxation rules. A group of the Inclusive Framework’s 139 members have not yet joined the Statement. The remaining elements of the framework, including the implementation plan, will be finalised in October. The two-pillar package is the outcome of negotiations coordinated by the OECD. It aims to ensure that large multinational enterprises (MNEs) pay tax where they operate and earn profits while adding certainty and stability to the international tax system.

Pillar One aims to re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there. Pillar Two seeks to place a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate of at least 15 percent.

Under Pillar One, taxing rights on more than USD 100 billion of profit are expected to be reallocated to market jurisdictions each year. The global minimum corporate income tax under Pillar Two – with a minimum rate of at least 15 percent – is estimated to generate around USD 150 billion in additional global tax revenues annually. Additional benefits will also arise from the stabilisation of the international tax system and the increased tax certainty for taxpayers and tax administrations.

Full details are set out in the OECD’s statement agreement of 1 July. You can also see the list of the 132 countries and jurisdictions who signed up to the current plans on the OECD’s website.