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Context: Recently, More than 130 countries agreed to set a minimum tax rate of 15 percent as governments look to end a race to the bottom on corporate taxation.
In recent years, countries have been debating significant changes to international tax rules that apply to multinational companies.
The proposal follows a general outline that has been under discussion since 2019. There are two “pillars” of the reform:
Pillar 1 is focused on changing where large companies pay taxes:-
Pillar 2 includes the global minimum tax:-
How would a deal work?
Why a global minimum tax?
What will be the economic impact?
What are the problems with the plan?
Where does India stand?
According to Finance Minister,
Note: To address “the challenges posed by the enterprises who conduct their business through digital means and carry out activities in the country remotely”, the government has the ‘Equalisation Levy’, introduced in 2016.
However, India, China, Estonia and Poland have said the minimum tax could harm their ability to attract investment with special lures like research and development credits and special economic zones that offer tax breaks to investors.”
Key Steps taken by India in this direction
Morover, New Delhi was “proactively engaging” with foreign governments with a view to facilitating and enhancing exchange of information under Double Taxation Avoidance Agreements, Tax Information Exchange Agreements and Multilateral Conventions to plug loopholes.
By: Shubham Tiwari ProfileResourcesReport error
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