The OECD/G20 Inclusive Framework for BEPS has completed negotiations on a multilateral instrument for Pillar 2 that implements the global minimum tax in member countries, the so-called STTR MLI. The Multilateral Instrument (MLI) enables countries to efficiently implement the Subject to Tax Rule (STTR) in existing bilateral tax treaties.
This is reported by the OECD. The text and explanation are on the website of the association of rich countries. The STTR is important for developing countries and one of the measures of Pillar 2 to guarantee a minimum level of taxation.
The STTR is intended for cases where a reduced rate for outgoing payments has been agreed in a tax treaty, but where these payments are taxed at a low rate in the country of the receiving entity. (Developing) countries may – notwithstanding the demarcation of tax rights agreed in a tax treaty – levy more (withholding) tax on certain payments if the other treaty country where the payment is received subjects it to a statutory corporate income tax rate that is lower than 9 percent.
This concerns interest, royalty and other payments (such as fees for services) paid between related persons (in particular group companies within the same multinational).
Now that the text of the STTR MLI is ready, it is open for signature by the countries.
Source: OECD
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