The international tax community has adopted the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule.
The Convention is an integral part of the Two‐Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy. The Convention, which is now open for signature, represents a major step forward in concluding the work under Pillar Two.
The Subject to Tax Rule (STTR) will enable developing countries to tax certain intra-group payments, in instances where these payments are subject to a nominal corporate income tax rate below 9%. The STTR allows source jurisdictions – those in which covered income arises – to impose a tax where they otherwise would be unable to do so under the provisions of tax treaties.
The text of the Convention, along with an explanatory statement, is available on the OECD’s website.