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Deputy Prime Minister and Minister of Finance Lyudmila Petkova signed a letter of intent for Bulgaria's accession to the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule

Deputy Prime Minister and Minister of Finance Lyudmila Petkova signed a letter of intent for Bulgaria's accession to the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule
Снимка: Deputy Prime Minister and Minister of Finance Lyudmila Petkova signed a letter of intent for Bulgaria's accession to the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule

20.09.2024

Deputy Prime Minister and Minister of Finance Lyudmila Petkova signed a letter of intent for Bulgaria's accession to the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule. The official ceremony took place on 19 September 2024 in the presence of the Secretary-General of the Organisation for Economic Cooperation and Development, Mr. Mathias Cormann, at the OECD headquarters in Paris, France. “This achievement is an important success for all members of the Inclusive Framework on BEPS. We support our commitment to the international efforts of G20 and OECD to address the tax challenges arising from the digitalisation of the economy and to implement the OECD Two-Pillar Solution,” Deputy Prime Minister Petkova said at the signing ceremony.

The Convention has been developed by the OECD within the framework of the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Project. The aim is to amend the network of existing bilateral double taxation avoidance treaties in a harmonised and efficient manner in view to swiftly and effectively implement the Subject to Tax Rule.

The rule allows jurisdictions to impose limited additional tax on certain cross-border intra-group payments, where the recipient is subject to an adjusted nominal corporate income tax rate lower than 9% to the categories of income covered. They commit to apply the Subject to Tax Rule in their bilateral tax treaties when so requested by jurisdictions identified as developing for this purpose. Bulgaria is not obliged to apply the Rule at the request of another jurisdiction, as it applies an adjusted nominal corporate tax rate above 9%, but can request this from countries that fall within the scope of the Rule.

The BEPS Project offers countries solutions to overcome differences in existing international tax rules that allow companies, through the use of aggressive tax planning schemes, to minimise their tax liability by artificially shifting corporate profits to low- or zero-tax countries and jurisdictions. The Republic of Bulgaria has the status of an associated member of the Inclusive Framework on the BEPS Project. Participation in this international initiative significantly increased the prestige of our country as a transparent tax jurisdiction that follows and applies high tax standards.

 

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