New Delhi: India and the majority of the members OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting adopted yesterday's high-level statement containing an outline of a consensus solution to address the tax challenges arising from the digitalisation of the economy, informed the Ministry of Finance on Friday. The proposed solution consists of two components- Pillar One which is about reallocation of an additional share of profit to the market jurisdictions and Pillar Two consisting of minimum tax and subject to tax rules.
"Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed. Further, the technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October," the ministry said. The principles underlying the solution vindicates India's stand for a greater share of profits for the markets, consideration of demand-side factors in profit allocation, the need to seriously address the issue of cross-border profit shifting and the need for the subject to tax rule to stop treaty shopping.
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