India agrees to landmark global tax framework on taxing multinationals

 India has agreed to a pathbreaking international framework with 129 other countries for taxing multinationals that could impact its ability to tax them

India has agreed to a pathbreaking international framework with 129 other countries for taxing multinationals that could impact its ability to tax them and have the potential to douse trade wars over taxing tech giants.

India and the other countries issued a joint statement on Thursday affirming support for the proposed framework which has at its core a global minimum corporate tax of 15 per cent and makes way for countries to tax multinational enterprises (MNEs), especially tech giants like Google, Facebook, and Amazon, on their earnings there.

"It would re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there," said the Organisation for Economic Cooperation and Development (OECD), which coordinated the development of the plan.

It "will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies", the OECD said.

India and the administration of President Joe Biden are embroiled in a dispute over New Delhi imposing a two per cent tax on earnings in the country by foreign technology and e-commerce companies like Amazon, Facebook and Google.

Biden's administration retaliated with a threat to raise import duties on a range of imports, from prawns and Basmati rice to furniture and jewelry, but kept it in abeyance hoping the new global tax framework could resolve it.