Since January 2, 2024, the EU has implemented new tax regulations, imposing a 15% minimum effective tax rate on multinational companies with annual revenues exceeding €750 million. This move marks a significant shift in EU tax policy, aimed at combating profit shifting and base erosion, ensuring multinational companies pay fair taxes within the EU.

It is understood that the core of this tax reform lies in setting a 15% minimum tax threshold to prevent companies from avoiding higher tax rates by shifting profits to countries or regions with lower taxes. This new regulation will significantly enhance the fairness and stability of the tax system within the EU and globally.

Additionally, the EU expects the new tax regime to generate approximately $220 billion in additional annual revenue. This significant fiscal boost is expected to support member states in providing higher-quality public services, thereby enhancing social welfare and economic development.

The implementation of this tax reform is seen as an important step by the international community in global tax cooperation. Through this measure, the EU hopes to more effectively address issues such as tax avoidance by multinational companies in the context of globalization, while promoting further coordination and harmonization of the international tax system.

With the new tax regime in effect, multinational companies need to reassess their tax arrangements within the EU and adjust their global business strategies to comply with the new tax requirements. Tax authorities in EU member states will also strengthen supervision and enforcement to ensure the effective implementation of tax policies.

Further Reading:Introduction to the EUs 15% Minimum Corporate Tax Rule in 2024