The 8th of October 2021 will perhaps be long-remembered as a milestone in the history of international tax policy; the day when 136 nations reached a political agreement to adopt landmark new tax rules in the international tax arena. Consequently, a final global deal was struck on 11 July 2023 achieved under the auspices of the Organization for Economic Development and Cooperation (OECD). The deal is a product of long-debated and often-stuck sessions taking place at the OECD since 2015.

The prospective shift in the international tax policy that draws on the so-called “two pillar approach” (now agreed by 141 out of 143 participating nations), promises two landmark changes in the taxation of multinationals, and will be enforced by years 2024-25. While certain operational details and related rules are still not fully functional, the new policy will bring substantive shifts in the existing 100-year-old international tax structure. For instance, under Pillar-1 of the global tax agreement, the market jurisdictions will for the first time gain taxing rights over profits of certain digital multinational companies; likewise, the Pillar-2 proposes a global minimum corporate tax rate of 15%. This session will discuss the potential consequences of the proposed changes in the global arena in general and their potential tax implications for Pakistan.