New Guidelines of the Global Tax System adopted

Just a few months ago, as we wrote HERE, the G7 finance ministers boasted that they had reached an “agreement of the century” – an agreement on a global and minimum tax rate of 15%. What has changed since then?

On Friday, October 5, 2021, more than 130 countries around the world agreed to changes in the way multinational technology giants will be taxed. This includes a minimum global tax rate of 15% to prevent multinational giants from hiding profits in the so-called “tax heavens”.

An agreement to change the global tax system will provide countries with additional revenue, and according to OECD data, that revenue could reach as much as $ 150 billion.

The reality of paying taxes is bizarre and the goal of this reform is to prevent multinational companies, especially GAFA (short for Google, Amazon, Facebook, and Apple), which have benefited enormously from the pandemic and restrictive measures, from paying low taxes comparing to revenues.

For example, in front of the court in Luxembourg, the European Commission asked Amazon for a tax surcharge, but the court ruled in favor of Amazon. The reality is even more bizarre because Luxembourg’s taxpayers have granted Amazon, which has its European headquarters there, a tax refund in the amount of $ 56 million!

That is why part of the package of the new global tax system is regarding new tax regulations and redistribution of the right to tax the largest companies. This will result in the redirection of part of the rights from the companies’ home countries to those in which they operate. The redistribution of tax rights will open the possibility of taxing more than $ 100 billion in profits annually, and a minimum global tax rate of at least 15% will generate about $ 150 billion additional revenue annually.

The proposals, which will provide much-needed support to governments in the post-pandemic world, have been supported by 130 of the 139 members of the OECD initiative and the G20, including Croatia. Nine members did not support the initiative, and some of them are Ireland and Barbados.


The global tax will not affect micro, small and medium-sized enterprises with total revenue of up to HRK 7.5 million. They will continue to pay a national tax rate of 10%.

On the other hand, the question is how this will affect the big ones, who invest in Croatia; whether it will still be able to maintain an income tax rate of 18% or not.

In addition to supporting governments, the OECD believes that the global tax system will contribute to a significant stabilization of the international tax system, as well as transparency for tax administrations and taxpayers.

The OECD reports that countries should sign a multilateral convention in 2022, with effective implementation in 2023. The convention is currently under development and will be used to implement the newly agreed first pillar tax law, as well as to stop and remove provisions relating to all existing taxes on digital services and other similar relevant unilateral measures.

Thus, the OECD will develop a model rule for the introduction of the second pillar into domestic legislation during 2022, which will take effect in 2023, the OECD said in a statement.

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