With a view to addressing the base erosion and profit shifting (BEPS) risks arising from the digitalisation of economy, the Organisation for Economic Co-operation and Development (OECD) on July 1, 2021, issued a “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy (Statement)” to ensure a fairer distribution of taxing rights in respect of profits of large multinational enterprises (MNEs) and to set a global minimum tax rate. A total of 130 out of its 139 member jurisdictions (including Hong Kong) have jointed the Statement and agreed on a way forward to address the tax challenges arising from the digitalization of the economy.
Pillar One (profit allocation rules)
Pillar Two (global minimum tax rules)
The OECD aims at finalising the technical details of the BEPS2.0 package by October this year and implementing the package in 2023.
MNE groups who may be affected by BEPS2.0 should consider to do or re-do an impact analysis on which parts of their business may be affected.
For more information, please contact Ms. Amie Cheung at email@example.com