JAKARTA. The European Union will soon implement a global tax reform agreement agreed upon by the 137 OECD and G20 countries, in particular regarding the implementation of a minimum tax rate of 15% for multinational companies in the Blue Continent.
The proposal was submitted by the European Commission which is the Executive Board of the European Union on Wednesday (22/12). The EU asks its 27 member states to implement the principles agreed in the Pillar 1 clause.
In addition to adopting the global consensus that has been made, the proposal will also regulate technical matters regarding the calculation of the effective tax rate. This includes exemptions to 5% of certain income from the value of tangible assets and 5% of salaries from tax calculation.
The proposal submitted will be complementary to the consensus that has been agreed by the OECD countries.
According to the European Union Commissioner for the Economy, Paolo Gentiloni, in his statement, this proposal was submitted to ensure the minimum tax rate of 15% is actually applied to the parent or subsidiary companies in Europe.
Therefore, if the minimum effective tariff is not applied by the country where the company is located, the European Union can apply it using a top-up approach.
As a result, the practice of a tax race or race to the bottom that is detrimental to the European Union economy can be ended.