Two-pillar reform of international taxation

On 1 July 2021, about 130 countries, including the Czech Republic, issued a joint statement on the two-pillar policy, under the auspices of the OECD, that will be the base for negotiations in the field of international taxation. The main goal is that multinational companies - especially companies providing digital services - shall pay taxes not only in the place of their seat but also in the place of their activities. Pillar one should ensure a fair distribution of profit and right to impose taxes among individual countries. Pillar two should decrease the risk resulting from structuring multinational companies in such a way that enables the shifting of profits realised by companies into countries with low or no taxation.

The above-mentioned statement reflects the discussions on the digital tax. The statement also includes the commitment of those individual countries that have introduced the digital tax to already cancel local digital tax once the new rules governing international taxation come into effect.

Technical details, including a detailed implementation plan, should be approved during the next meeting in October 2021. The start of the implementation of the new rules is expected at the beginning of 2023.