June 7, 2023

Great Indian Mutiny

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India will ultimately benefit from the OECD Global Tax Agreement: CBDT – EzAnime.net

Under one pillar, taxes on revenue in excess of $ 125 billion each year are expected to be redistributed to market jurisdictions.

CBDT) Chairman, JB Mohapatra, told FE that India will benefit in terms of tax revenue in the coming years. However, tax experts were skeptical about the potential gains for India from the new regime, at least in the medium term.

Mohabatra from OECD said that India will continue with the so-called equilibrium tax, which reached about Rs 2.2 billion in FY21 and will fetch more than Rs 3 billion in FY22 until the framework is implemented. With the exception of electric vehicles, India should repeal the Special Economic Zone (SEP) introduced this year.

On October 8, it gave political commitment to possible fundamental changes in the 136 international corporate tax system in 140 countries. The proposed solution consists of two components: the first pillar refers to the redistribution of additional profit share to the market jurisdictions, and the second to the minimum tax.

Under the latest OECD framework agreement, the first pillar will apply to multinational corporations with profits of more than 10% and global revenues of over 20 20 billion. Profits redistributed to markets will be calculated as 25% of profits before tax exceeding 10% of income.

Mohabatra said India wants to cut 20 billion euros instead of the top 100 multinationals and that the remaining profit margin for market jurisdictions will be more than 25% when reviewed after seven years.

Under the current First Pillar Agreement, all multinational companies providing services or supplying goods to customers in India will be covered. India will not be bad if it adheres to the inclusive structural agreement. We expect India to win in a certain period of time, ”Mohapatra said.

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According to tax consultancy EY India, while India is a major market for digital companies, it is not certain that India will be a major winner after the implementation of the Pillar One rules. He said these rules apply to most multinational groups. The scope is constrained compared to the national ‘compensation rate’ which contributes significantly to India’s tax revenue. “Large multinational corporations in India must also comply with the Bilver One rules and India must share its tax law with other countries,” he added.

Under one pillar, taxes on revenue in excess of $ 125 billion each year are expected to be redistributed to market jurisdictions.

The income gains of developing countries are expected to be higher than those of developed economies at the rate of current revenues, the OECD said in a report on October 8. Pillar Two introduces a global minimum corporate tax rate of 15%. The new minimum tax rate is expected to apply to companies with revenues of more than $ 50,750 million and generate about $ 150 billion in additional global tax revenue annually.

A two-pillar solution will be provided for the G20 finance ministers ‘meeting in Washington on October 13 and the G20 leaders’ summit in Rome later this month.