OECD: Revenue gains from BEPS 2.0 predicted to be higher than previously expected
OECD announced that revenue gains from implementation of agreement to reform international tax system will be higher than expected
Revenue gains from BEPS 2.0 predicted to be higher than previously expected
The Organisation for Economic Cooperation and Development (OECD) today released a statement announcing that revenue gains from the implementation of the agreement to reform the international tax system will be higher than previously expected.
- The proposed global 15% minimum corporate income tax is now expected to result in annual global revenue gains of around U.S. $220 billion, or 9% of global corporate income tax revenues. This is a significant increase over the OECD’s previous estimate of U.S. $150 billion in additional annual tax revenues attributed to the minimum tax component of Pillar Two.
- Pillar One, designed to provide a fairer distribution of taxing rights among jurisdictions over the largest and most profitable multinational enterprises (MNEs), is now expected to allocate taxing rights on about U.S. $200 billion in profits to market jurisdictions annually. This is expected to lead to annual global tax revenue gains of between U.S. $13-36 billion, based on 2021 data. The new estimates reflect a significant increase compared to the U.S. $125 billion of profits in previous estimates. The analysis finds that low and middle-income countries are expected to gain the most as a share of existing corporate income tax revenues.
The new estimates on the economic impact of the two-pillar solution are based on updated data and incorporate most of the recently agreed design features included in the Amount A Progress Report and the GloBE Model Rules, many of which have not been accounted for in other studies.
The update to the OECD’s earlier assessments, including its detailed Economic Impact Assessment issued in October 2020, shows that projected revenue gains under Pillar One have increased, and continue to rise over time, due to both revisions to the design of the tax reform and increased profitability of in-scope MNEs. It also shows increased projected revenue gains from Pillar Two, which reflect some increases in global low-taxed profit, including as a result of improved data coverage.
A full economic impact analysis, as well as a detailed methodology report, will be released in the coming months.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.