The measures under pillar two aim to introduce a global minimum corporate taxation irrespective of the countries in which companies are resident or carry out their business activities. This pillar also comprises rules on dispute prevention and resolution in order to address any risk of double taxation. To establish a worldwide uniform taxation approach of the digital economy under the MLC, the pillar will also require participating countries to remove existing digital services taxes (e.g. The focus is particularly on highly automated, digital services provided by large multinational corporations with revenue of at least EUR 20bln and profit of at least 10 % (' digital economy'). Consequently, pillar one reallocates taxing rights from those home countries to the countries where companies engage in business activities and generate revenue of EUR 1m or more. Although enormous profits are generated and local infrastructure is used in the respective country, corporate tax is solely incurred by the country where the company's headquarters is located ('home country'). The recent past shows that many successful multinational companies operate their business in countries without having a physical presence there. The second pillar defines a floor on tax competition through the introduction of a global minimum corporate tax of 15 %. The first pillar enables greater fairness in the allocation of taxing rights and tax revenues among countries and thus defines who gets which piece of the tax pie. 'The MLC will encompass two pillars, the aim being to ensure that companies pay their fair share to help finance public goods wherever they operate and to enhance fair taxation among countries worldwide through the implementation of a global minimum corporate tax rate.' The MLC will encompass two pillars, the aim being to ensure that companies pay their fair share to help finance public goods wherever they operate and to enhance fair taxation among countries worldwide through the implementation of a global minimum corporate tax rate. The reform will be enacted through a multilateral binding agreement (Multilateral Convention, 'MLC'), which consequently needs to be ratified by all participating countries at the national level and is envisaged to enter into force in late 2023.

Double focusing of mlc