OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS)  have agreed on a side by side arrangement package for the co-ordinated operation of global minimum tax arrangements.

• Global Minimum Tax: It is based on Global Anti-Base Erosion (GloBE) Model Rules. It aims to ensure that large multinational enterprises pay a minimum level of tax on their income in each jurisdiction where they operate, thereby reducing the incentive for profit shifting and placing a floor under tax competition, bringing an end to the race to the bottom on corporate tax rates. 
  • BEPS refers to tax planning strategies that multinational enterprises use to exploit loopholes in tax rules to artificially shift profits to low or no-tax locations as a way to avoid paying tax. (E.g.  through deductible payments like interest or royalties).

Global Min Tax Package

• The package includes five key components
  • Simplification measures: Reduces compliance burdens for multinational enterprises (MNEs) and tax authorities.
    • MNEs are groups of companies and generally operate worldwide through locally incorporated subsidiaries or permanent establishments.
  • Tax incentive alignment: Introduces a targeted substance-based tax incentive safe harbour to align global treatment of tax incentives.
  • Safe harbours for qualifying MNEs: Available to MNE Groups with ultimate parent entities in eligible jurisdictions meeting minimum taxation requirements.
  • Level playing field: Includes evidence-based stocktake process to ensure fair treatment for all Inclusive Framework Members.
  • Domestic minimum tax protection: Reinforces qualified domestic minimum top-up tax regimes as the primary mechanism for protecting local tax bases, particularly in developing countries.