top of page
  • InduQin

How the Global Tax Deal Will Impact US-India Trade Relations?

Rarely do you have global consensus between the representatives of almost 140 countries who can find common ground on most issues, let alone on taxes, a contentious issue by itself. But, earlier this month, the Organization for Economic Cooperation and Development (OECD) did just that. In their meeting on October 8, the OECD was able to bring together such a consensus on how companies around the world should be taxed in a jurisdiction where they do not have any domicile status or a physical place of doing business. Following years of intensive negotiations to bring the international tax system into the 21st century, 136 jurisdictions (out of the 140 members of the OECD/GROUP OF 20 (G20) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.

Today, Digitization is transforming lives in many aspects as well as how our economy functions. Technology has permeated across various sectors, creating sub-sectors of technology, like FinTech, EdTech and MedTech. However, with these new sectors, technology also enabled a sense of location agnosticism and the overnight implementation of a digital world that most of us have lived in since the onset of the pandemic.

The ease of virtual operations today can create a lack of defining where a business is based out of, often leading to complexities establishing policies such as domestic or overseas tax laws. Many countries, including India, introduced unilateral measures to tax such multinational companies (MNCs).

At that point, the OECD orchestrated an inclusive framework to bring together policy makers from around the world, setting the stage for a new global taxation regime. The same technology that helped businesses break international boundaries also prompted nations to bring parity in tax laws across borders.

Four months of intense deliberations between the Group of Seven (G7) members led to an upcoming agreement on a 15 percent global minimum corporate tax. Now, a whopping136 nations, including India, have endorsed the proposal.


2 views0 comments
bottom of page