In the loop - Global taxation: More than an idea - what it means for you now

In brief

The current international tax landscape has been in place for decades, but now major changes are on the horizon for multinational companies. The Organisation for Economic Cooperation and Development (OECD) backed by countries around the world, has been pursuing a Two-Pillar Solution aimed at alleviating certain global tax challenges that it believes arose from the “digitalisation of the economy.” The OECD two-pillar framework is significantly altering many current international tax practices with a related impact on reported earnings and cash flows.

In simplest terms, Pillar One would change where sales to customers in other jurisdictions are taxed and Pillar Two proposes a global minimum tax assessed for each jurisdiction where a multinational company operates. We explore implications of this evolving global tax regime for US-based multinational companies below, with a focus on Pillar Two.