OECD: Delayed New Regulations on Taxation of Multinational Companies

New regulations on the taxation of multinational companies will come into effect in 2025, a year later than planned, due to delays regarding the taxation of digital services, announced the Organization for Economic Cooperation and Development (OECD).

More than 140 countries, including Croatia, were supposed to introduce new regulations on the taxation of multinational companies in 2024 to prevent digital giants like Apple and Amazon from booking profits in low-tax countries.

The agreement provides for the redistribution of taxation rights on approximately $200 billion in profits of the largest and most profitable multinational companies based on the place of sale.

The second part of the international agreement is expected to end tax competition by adopting a minimum corporate tax rate of 15% starting next year.

More than 30 countries that have already introduced or plan to introduce a digital services tax have agreed to freeze collection and plans until the end of this year or abandon that tax when that part of the agreement takes clearer shape.

More than 50 countries have already initiated the process of adopting the second part of the agreement regarding the introduction of a minimum tax, but it has stalled on the first part, the OECD reported, as a group of countries expressed doubts.

Of the 143 signatory countries to the agreement, only Belarus, Canada, Pakistan, Russia, and Sri Lanka did not support it at the meeting, said OECD tax chief Manal Corwin.

‘Canada did not agree to the freezing’ of the digital tax, Corwin said.

The plan is therefore to ‘refine’ the details so that governments can approve them by the end of the year.

If at least 30 countries accept the plan, digital services taxes will be frozen in 2024, with the possibility of extending for another year if necessary, the OECD announced.

The tax agreement is now expected to come into effect in 2025, a year later than originally planned.

Even when governments sign the agreement, ratification will not be an easy task, especially in the U.S. where a two-thirds majority in the Senate is required, Reuters notes.