Read the statement as the original agreement
This eight-page OECD statement is dated 8 October 2021. The downloaded copy notes that 139 jurisdictions had agreed as of 9 June 2023 and that not every Inclusive Framework member had joined. The document sets out the political agreement’s two pillars and a detailed implementation plan. Its proposed dates, thresholds and policy design are historical, not a current Singapore filing timetable. Subsequent Model Rules, Commentary, administrative guidance and national law determine actual implementation. The statement is useful for understanding what the agreement originally intended and how the two pillars differ.
Pillar One scope and market nexus
The original Amount A scope is MNE turnover above EUR20 billion and profit before tax/revenue above 10%, using averaging. A reduction to EUR10 billion depends on successful implementation including tax certainty, with review starting seven years after entry into force and finishing within a year. Extractives and regulated financial services are excluded. A market qualifies for allocation where the group earns at least EUR1 million revenue there; for jurisdictions with GDP below EUR40 billion the nexus is EUR250,000. This special nexus only determines Amount A eligibility and is not a new general permanent-establishment test.
Amount A profit allocation, sourcing and relief
Allocate 25% of residual profit, defined as profit above 10% of revenue, to qualifying markets using a revenue key. Source revenue where goods or services are ultimately used or consumed, with reliable transaction-specific methods to be developed. Financial accounting income with limited adjustments determines profit/loss, and losses carry forward. Segmentation is exceptional where a disclosed segment itself meets scope. A marketing/distribution profits safe harbour would cap allocation where residual profits are already taxed in the market. Double taxation would be relieved by exemption or credit, with liability borne by residual-profit earners. Mandatory binding prevention and resolution covers Amount A and related disputes; certain developing economies eligible for deferred Action 14 review and with low MAP activity could elect the specified mechanism, with eligibility reviewed.
Amount B, administration and unilateral digital taxes
Amount B envisaged simplifying arm’s length pricing for in-country baseline marketing/distribution, especially low-capacity countries, with completion then targeted for end-2022. Filing was to be streamlined through one entity. A multilateral convention would require removal of digital services taxes and relevant similar measures for all companies and prevent their reintroduction. The original standstill on newly enacted measures ran from 8 October 2021 to the earlier of 31 December 2023 or convention entry into force. These are original commitments and milestones; the statement itself does not establish that a convention later entered into force or that every national digital tax was repealed.
Pillar Two rule order and common approach
GloBE combines an Income Inclusion Rule imposing parent-level top-up tax on low-tax constituent income and an Undertaxed Payment Rule denying deductions or making equivalent adjustments for income not caught by IIR. The treaty-based Subject to Tax Rule separately permits limited source taxation of certain related payments and counts as covered tax. GloBE is a common approach: adoption is not compulsory, but adopting members agree consistent implementation and acceptance of others’ application, ordering and safe harbours. The statement uses EUR750 million scope under Action 13, while allowing countries to apply IIR to their own headquartered smaller groups. It excludes specified government, international, non-profit, pension or investment-fund UPEs and their holding vehicles.
Original ETR, carve-outs and initial-activity exclusion
The statement sets a 15% jurisdictional effective-tax minimum, using common covered taxes and adjusted accounting income with timing mechanisms. IIR follows top-down ownership with a split-ownership rule below 80%; UTPR can reach the UPE jurisdiction. The original initial-international-activity exclusion covers at most EUR50 million foreign tangible assets and no more than five other jurisdictions, for five years from entering scope, or from UTPR start for already-in-scope groups. Substance exclusion ultimately uses 5% of tangible-asset carrying value and payroll; the ten-year transition starts at 8% assets and 10% payroll, declining 0.2 percentage points annually for five years, then 0.4 for assets and 0.8 for payroll for five. De minimis is revenue below EUR10 million and profit below EUR1 million. Existing distribution systems avoid top-up where distributions within four years meet the minimum. International shipping is separately excluded. Read later detailed definitions before applying these original summaries.
STTR differs from the 15% GloBE rate
The statement envisages 9% STTR on interest, royalties and defined other related payments, with source taxing rights limited to the gap between the minimum and the payment’s nominal rate. Members applying lower nominal corporate rates would add it to treaties with requesting developing members. The original developing-country definition uses 2019 World Bank Atlas-method GNI per capita no more than US$12,535, with regular updating. This treaty mechanism is distinct from jurisdictional 15% IIR/UTPR and their ETR calculation. The statement also anticipated safe harbours and consideration of coexistence with US GILTI; it did not provide a final universal coexistence exemption.
The full annex is a historical work programme
For Amount A, the annex proposed an MLC and explanatory statement by early 2022, signing around mid-2022 and 2023 effectiveness after a critical mass ratified. Existing treaties would continue outside Amount A; without a treaty, the MLC would establish the needed relationship. TFDE would develop domestic model rules, while Working Party 6 and the FTA MAP Forum would complete Amount B by end-2022. For Pillar Two, the plan targeted Model Rules and STTR treaty text by November 2021, an STTR multilateral instrument by mid-2022 and an implementation framework by end-2022 covering filing, review and safe harbours. Original proposed law in 2022, operation in 2023 and UTPR in 2024 were ambitious targets subject to legislative processes. The plan also promised developing-country technical assistance and stakeholder consultation. None of these planned dates should be relabelled as current deadlines.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗