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EU Will Likely Adopt OECD’s Global Tax Plan

18th November 2021

For the one or two of you that hasn’t yet tired of hearing about the OECD’s global tax plan, a quick update: As you probably know, the proposal includes a 15% global minimum tax rate, and it reallocates profits generated by the world’s biggest conglomerates—a huge rewrite of the global tax system as we know it and one that required rounds and rounds of negotiations to get global buy-in. On October 8, however, a miracle happened: 137 countries signed the deal. Of course, most will have to adopt the proposal into local legislation to make it official. As for EU countries, however, things work a little differently: First, all member states of the EU will vote on a sweeping directive, expected in December. Directives require unanimous support. Once approved, the directive is binding in its entirety and requires member states to enact the directive into national law within a set deadline. While the Commission can alter the OECD’s version of the rollout, it most likely won’t—and, according to the OECD, shouldn’t. At a recent event hosted by European Movement Ireland, OECD Tax Policy Director Pascal Saint-Amans remarked on the importance of consistency for the deal to be effective. That kind of cohesion shouldn’t be a problem for the bloc, as EU countries are supportive of the global tax deal—even reluctant Ireland now appears all-in. Given that a directive has to have unanimous support of all EU countries, a proposal that mirrors the OECD’s guidance is the most likely shoe-in. As Saint-Amans pointed out, inconsistent legislation would complicate things for all countries. Complicated tax policy? Who would ever want that?