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August 2022

PILLAR 2: AN INTRODUCTION TO GLOBAL MINIMUM TAXATION – PART I

By Mohit Singh Raisinghani | Dolly Sharma
Chartered Accountants
Reading Time 27 mins

 1. INTRODUCTION – BEPS 2.0 - HEADING TOWARDS A GLOBAL RESET

“I see it as completion of work we started 10 years ago…It puts an end to the craziness where you could reduce your tax burden legally, massively, and in complete contradiction with the spirit of the law1.”

“Tell your CFOs, your CEOs, that the game has changed and that the tax function should be boring. It’s no longer a profit centre. So just tell your tax colleagues that it’s going to be boring. They will have to comply to pay the tax. And that’s done. They will stop playing with very sophisticated engineering2.”

– Pascal Saint-Amans, Director of the Center for tax policy, OECD

1.1 Introduction, policy objectives behind Pillar 2: Despite BEPS 1.0 project, it was felt that risks of profit-shifting to no/ very low tax jurisdictions persist due to increasing reliance of the world’s economy on mobile resources such as finance and intangibles. To illustrate, it was felt that there is still a tendency to allocate substantial intangible and financial risk-related returns to group entities (in low-tax jurisdictions) that have a modest level of substance. To address these “remaining” BEPS risks and having regard

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