OECD/G20 Inclusive Framework tax deal
Context:
- India joins OECD/G20 Inclusive Framework tax deal
OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting
- It is a solution for addressing the tax challenges arising from the digitalisation of the economy.
- It consists of two components-
- Pillar One- reallocation of additional share of profit to the market jurisdictions and
- Pillar Two -minimum tax and subject to tax rules.
Why India joined this tax deal?
- India’s has a greater share of profits in the markets
- consideration of demand side factors in profit allocation,
- to address the issue of cross border profit shifting and
- to stop treaty shopping
- needed a consensus solution that is simple to implement and comply.
About OECD:
- The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 38 member countries.
- It was founded in 1961 to stimulate economic progress and world trade.
- OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries.
- India is not a member of OECD.
About G-20:
- It is a forum for finance ministers and central bank governors from nineteen of the world’s largest countries as well as the EU.
- Apart from the G7 countries, the G20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.
- Together, the G20 countries make up around 80% of the world’s economy and two-thirds of the world’s population
https://pib.gov.in/PressReleasePage.aspx?PRID=1732150