The Strategist

Global "tax revolution" for multinational corporations postponed until 2024

07/12/2022 - 08:38

According to Bloomberg and The Wall Street Journal, implementation of the global tax overhaul for multinational corporations would not begin until 2024.

Images Money
Images Money
Work on tax adjustments for multinational firms is currently proceeding as part of an agreement signed under the auspices of the Organization for Economic Cooperation and Development (OECD) in October 2021.

A reform that would allow countries to tax businesses even if they are not physically present in the country but receive revenues from local consumers was agreed upon at the time by 141 countries and jurisdictions. The new regulations will mostly have an impact on big IT enterprises with international clients.

This choice was dubbed a "tax revolution" by Bloomberg. The legislation was anticipated to generate $150 billion in new taxes each year, according to the OECD. The signing and implementation of a multilateral convention on the new rules were scheduled for 2022 and 2023, respectively.

The OECD now anticipates that a new mechanism won't be created until mid-2023, allowing it to take effect in 2024. In a report to the G20 finance ministers, OECD Secretary-General Mathias Cormann blamed the delay to a new method of determining tax liability and a departure from the historic principles of taxation. However, he acknowledged that delaying the deadline by a year will disappoint nations that have long sought a revision in the laws.