Global Moment In Tax Reform: What Boards Need To Know

Global Moment In Tax Reform: What Boards Need To Know

The interconnection of national and international tax restructuring results in a very complex environment that creates a lot of uncertainty for businesses everywhere. There is currently a global moment in proposed tax reform; the G7 is encouraging 140 countries to complete a project led by the OECD (The Organization for Economic Co-operation and Development) and G20 to overhaul tax laws impacting multi-national businesses. In tandem with its participation in these global tax reform efforts, the Biden administration in the US is also working to enact new tax legislation. 140 nations are working together on two ideas that have been named Pillar One and Pillar Two. Pillar One: The goal of Pillar One is to address the concerns of nations such as France and the UK where the very largest size (in dollars) companies have a significant number of customers. The proposed plan currently applies to companies with revenue over $24B / €20B and states that if a company's profit reaches 10% threshold, the nations where the customers are located are able to tax between 20% - 30% of the profits above the 10% level. This set of requirements results in only about 100 companies being impacted, a large share of