In our recent article, we discussed the trends and prospects of taxation in respect to international IT companies, including the introduction of a minimum tax rate (global tax) as set by G20 member states.

At the same time, recent discussion showed that global tax rules would apply not only to the IT industry, including such companies as Google, Meta (aka Facebook) and Apple, but also to multinational enterprises specializing in various areas. As expected, the main criterion for applying these rules will be a certain threshold of revenue and sales of a corporation.

The idea of introducing a global tax as a remedy for tax abuse by multinational enterprises has been under discussion in the international community for quite a long time. As a result of years of work, the OECD developed a project on introducing a global tax at a rate of 15%, and the U.S. Department of the Treasury proposed to implement it in May 2021. Later, such initiative was supported during the discussion among G7 member states.

The latest development on this topic was a resolution by state leaders at the G20 summit in Rome on October 30-31 this year, which approved the final decision of the OECD on introducing a global tax. It is expected that in 2022, 136 countries (including Russia) will sign a convention obliging them to implement its provisions at the national level by 2023.

Currently, the following conditions are agreed in respect of the global tax:

• for companies with global revenue exceeding EUR 750 million, minimum profit tax rate will comprise 15%, as the U.S. initially proposed;
• multinational enterprises with global sales exceeding EUR 20 billion and profitability above 10% will have to pay tax in the jurisdictions where they earn most of their profits, regardless of whether the firms have a physical presence there. 

Please note that according to the OECD statement, the convention will also require countries that have already adopted local digital taxes and other similar measures to remove or to commit not to introduce in the future other laws and taxes that may conflict with these rules.

We are now eagerly awaiting the full text of the global tax convention, which will be published at the end of November. / The full text of the global tax convention was published in November. We will continue to monitor the developments and keep you updated about taxation of international companies and the IT industry.