New cross-border corporate tax rules could yield about USD 250 billion in extra revenue for governments, more than previously expected, the Organisation for Economic Cooperation and Development said on Wednesday.
Close to 140 countries are getting ready to implement as of next year a 2021 deal on governments’ rights for taxing multinationals, in accounting for the emergence of big digital companies like Apple and Amazon, which have been booking profits in low-tax countries.
The first strand of the two-track reform is designed to reallocate 25 percent of profits from the world's biggest multinationals for taxation in countries where their clients are based, regardless of the companies' actual location.
The second strand aims to set a global minimum corporate tax rate of 15 percent, by allowing governments to apply a top-up tax to that level on any profits booked in a country with a lower rate.
The OECD estimates that the minimum tax would yield USD 220 billion, or 9 percent of global corporate income tax – up from a previous estimate of USD 150 billion.
Meanwhile, the reallocation of taxing rights under the reform's first pillar was expected to cover USD 200 billion in multinationals' profits, up from USD 125 billion previously.
The increase was mainly due to higher multinational profits now than was the case a couple of years ago, with 50 percent coming from large digital groups, the OECD said.
The second pillar was now seen generating tax gains of between USD 13 billion and USD 36 billion thanks to more profit being covered.
While developing countries have trounced the reform over concerns that they could suffer, the OECD's updated analysis found that low- and middle-income countries would become the biggest winners of the taxing rights reallocation.
Meanwhile, low-tax investment hubs where multinationals have booked their profits until now would end up surrendering more taxing rights than they are allocated, the OECD said.