The agreement has been developed  as part of the project of the Organisation for Economic Co-operation and Development (OECD) for limiting the artificial reduction of the tax base and the transfer of profits (base erosion and profit shifting or BEPS).

In brief, the agreement will affect mainly the taxation of the biggest multinational companies and consists of two pillars:  

-           The first pillar, which affects multinational corporations with annual global turnover of over EUR 20 billion. It is  envisaged that up to 10% of their annual profits shall be distributed for tax purposes to the countries where the goods or services they provide are actually used.

-           The second pillar envisages the countries - parties to the agreement to introduce a flat rate for corporate taxation of at least 15%, applicable to the profit of multinational corporations with annual revenues of over EUR 750 million, established on their territory. There are also some tax reliefs for these corporations. This measure aims to put an end to the practice of large multinational companies to establish their headquarters in countries with low tax rates.

Currently, the agreement has been backed by 137 (including Bulgaria) out of 140 countries in total, involved in the OECD BEPS Project. It is important to highlight that the agreement does not envisage an obligation for the countries to increase their corporate tax rates beyond the commented cases.

The measures under the agreement are to become effective in 2023 at the earliest, with the conclusion of a multilateral agreement among the countries supporting the project.

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