India joins OECD/G20 Inclusive Framework tax deal
New Delhi, July 2, 2021
India has joined the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework tax deal that is aimed at addressing the tax challenges arising from the digitalisation of the economy.
An official press release said here today that the majority of the members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, including India, adopted a high-level statement on Thursday containing an outline of a consensus solution in this regard.
The proposed solution consists of two components- Pillar One which is about reallocation of an additional share of profit to the market jurisdictions and Pillar Two on minimum tax and subject to tax rules, it said.
Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed. The technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October, the release said.
"The principles underlying the solution vindicates India’s stand for a greater share of profits for the markets, consideration of demand-side factors in profit allocation, the need to seriously address the issue of cross border profit shifting and the need for subject to tax rule to stop treaty shopping," it said.
"India is in favour of a consensus solution that is simple to implement and simple to comply with. At the same time, the solution should result in the allocation of meaningful and sustainable revenue to market jurisdictions, particularly for developing and emerging economies. It will continue to be constructively engaged for reaching a consensus-based ready to implement solution with Pillar one and Pillar two as a package by October and contribute positively to the advancement of the international tax agenda," the release added.