Tax Challenges Arising from the Digitalisation of the Economy – Subject to Tax Rule
Inclusive Framework on BEPS
A key part of the OECD/G20 BEPS Project is addressing the tax challenges arising from
the digitalisation of the economy. In October 2021, over 135 jurisdictions joined
a ground-breaking plan – the Two-Pillar Solution to Address the Tax Challenges Arising
from the Digitalisation of the Economy – to update key elements of the international
tax system which is no longer fit for purpose in a globalised and digitalised economy.
The Global anti-Base Erosion Rules and the Subject to Tax Rule (STTR) are key components
of Pillar Two of this plan and ensure multinational enterprises pay a minimum level
of tax on the income arising in each of the jurisdictions where they operate. More
specifically, the STTR is a treaty-based rule that protects the right of developing
Inclusive Framework members to tax certain intra-group payments, where these are subject
to a nominal corporate income tax that is below the minimum rate. This report contains
the model treaty provision to give effect to the STTR, together with an accompanying
commentary explaining the purpose and operation of the STTR.
Published on July 17, 2023Also available in: French