13 november 2020

On 12 October 2020 OECD released draft proposals to BEPS 2.0, which, in connection with the digitalization of the economy, include plans to propose a global corporate tax. The minimum global tax is said to make the companies engaged in international financial transactions pay a tax amount not lower than the specific minimum level. OECD says the global minimum tax will reduce the incentive for taxpayers to shift profits to low-tax jurisdictions and establish a floor for tax competition among countries.


  • it is proposed to limit application of the minimum tax rates and establish them only for multinationals with annual gross revenues exceeding 750 million EURO;
  • the specific levels of minimum tax rates are not yet known, but possible rates from 7,5 to 17,5% are discussed;
  • each country will reserve the right to determine its own tax system and tax rates, the global minimum tax will just allow other countries to introduce additional tax rules.


A. If the profit of a controlled foreign company or a foreign subsidiary is taxed at a rate below the minimum level, such income is subject to the global minimum tax in the country of the controlling person or head office.

B. If the country where a company is a resident has low or no profits tax, the provisions of the double taxation treaty (DTT) will not allow to impose the global minimum tax on profits, and it is recommended to change the provisions of the DTTЕ.

C. If a parent company of a corporate group or its sub-holding company is located in low-tax jurisdictions or countries, the right to impose an additional tax may pass to the country from which payments are made to the low-tax jurisdiction. This right can be partially transferred to the countries where the group’s companies are located, which expenses generally exceed their profits from intra-group transactions, although they do not make direct payments to low-tax jurisdictions.

D. The tax must be remitted by the source of payment, i.e., the purchaser, with respect to such profits as interest, royalty, lease, insurance premiums, marketing services, intermediary services and other payments paid to a related party where such profits are taxed at a low tax rate.

E. When determining the consolidation group, it is proposed to rely on the respective accounting standards; to use the accounting standards of the parent company with limited amendments for tax purposes; to determine the effective tax rate for the group’s companies from one jurisdiction as a whole; to allow to carry forward the losses. 

Prepared as of 13 November 2020