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Friday, July 30, 2021

India backs OECD-G20 tax deal, ‘consensus agreement’ likely by Oct

The principles underlying the solution vindicates India’s stand for a greater share of profits for the markets and consideration of demand side factors in profit allocation.

By: Express News Service | New Delhi |
July 3, 2021 6:48:50 am
On Thursday, 130 countries on Thursday agreed at the OECD to a overhaul of global tax norms. (AP/file photo)

India and majority of the members OECD-G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) have adopted outline of a consensus solution to address the tax challenges arising from the digitalisation of economies. The principles underlying the solution vindicates India’s stand for a greater share of profits for the markets and consideration of demand side factors in profit allocation.

The new framework also seeks to address concerns over cross-border profit shifting and bring in subject-to-tax rule to stop treaty shopping. The proposed solution consists of two components: Pillar One, which is about reallocation of additional share of profit to the market jurisdictions, and Pillar Two consisting of minimum tax and subject to tax rules.

“Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed. Further, the technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October,” the Finance Ministry said in a statement. FE

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