Differing Views: Global Tax Pillar 1 Agreement Set to Face Setback

JAKARTA. The signing of the Multilateral Convention (MLC) on Pillar 1 has been postponed until June 2024. Previously, the OECD targeted the signing of the MLC to take place at the end of 2023.

The MLC will be the basis for countries in allocating taxing rights on the profits of global multinational companies that fall within the scope of Pillar 1 provisions.

Meanwhile, Pillar 1 is an international taxation framework that regulates the right to tax the profits of multinational companies to market countries.

Read: OECD Releases Text of Pillar 1 Convention on Global Taxing Rights

Reason for postponement

This postponement was conveyed by the Organisation for Economic Co-operation and Development (OECD), based on the agreement of inclusive framework (IF) member countries, on Monday (18/12).

The postponement was made because the discussion on the MLC draft was still dynamic. There are still different views from each IF member regarding the MLC text that will be agreed upon.

Along with the announcement of the postponement, the OECD also released the latest MLC draft, as a form of transparency of the progress of the ongoing discussions.

Commitment to Settlement

The OECD also expressed its commitment to immediately resolve the differences that arise. "The resolution of the remaining differences should continue until next year," it said. 

With this commitment, IF confirmed that the drafting of the MLC will be completed by the end of March 2024. (ASP/KEN)