Greece is among the 130 countries and jurisdictions that have agreed on reforming international taxation rules to ensure multinational enterprises ( MNEs) pay a fair share of tax wherever they operate.

The initiative, under the auspices of OECD, will update key elements of the century-old international tax system, which is no longer fit for purpose in a globalised and digitalised 21st century economy. 

The goal is to support governments to raise revenues to repair their budgets and their balance sheets while investing in essential public services, infrastructure and the measures necessary for the post-COVID recovery.

Participants have set an ambitious timeline for conclusion of the negotiations. This includes an October 2021 deadline for finalising the remaining technical work on the two-pillar approach and a plan for effective implementation in 2023. A further boost to the negotiations is expected at the G20 Summit next week.

The Greek Ministry of Finance welcomes the agreement on the new global tax system and closely follows the procedures.

Greece is particularly involved in the discussions on the taxation of the digital economy. Athens notes that unilateral tax measures on the digital economy do not work and cannot face the challenges coming from the modern business models.

How will the two pillars work

OECD says the aim of the two-pillar package is to set multilaterally agreed limitations on tax competition, not to eliminate it.

Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies. It would 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 put a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases.

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% – 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.