The Global Minimum Tax | Selected Issues on Pillar Two

S. 5501. Introduction

The efforts to improve international tax cooperation has been consistent for decades. However, the recent economic changes and policy reforms demand a desperate increase in these efforts. In 2020, the Organisation for Economic Co-operation and Development (‘OECD’) proposed a Two-Pillar Solution to address the tax challenges arising from the digitalization of the economy. Despite the initial ambition to reach an agreement on the proposed solution by the end of 2020, there has been an immense delay as countries struggle to reach an agreement. Several doubts have been raised regarding the OECD’s ability to facilitate international tax cooperation, especially when it comes to addressing the concerns of developing countries. International tax cooperation is essential to achieve any consensus on the Two Pillar solution, and it is important for the OECD to make the discussion more inclusive and equally benefiting to all countries involved.

When it comes to Pillar Two, there is one element that attempts to address these concerns and supports an equal footing for countries. The qualified domestic minimum top-up tax (QDMTT) gives priority to the taxing right of the source state...