Implications of Missing Deadline for Multilateral Convention in Global Tax Deal

The deadline for signing the Multilateral Convention (MLC) for Pillar 1 of the global tax deal has passed, leading to concerns about the potential resurgence of digital services taxes and trade tensions among Big Tech players.

According to experts, the failure to sign the MLC could delay the implementation of Pillar 1 and result in countries re-introducing digital services taxes during the transition period. This could reignite trade tensions between the USA and other nations.

“The EU countries may soon start asking US tech giants to pay the unpaid taxes if a deal is not reached,” a tax expert revealed. However, India’s reaction may not be as pronounced, as they may extend the imposition of a 2 per cent equalisation levy until a resolution is reached with the US government.

While Pillar 2 has made progress with around 40 countries already applying the rules, there may be some announcements around the minimum 15 per cent corporate tax rate in the upcoming Budget.

Overall, the fate of the extended transitional credit deadline for digital service tax post-June 30 remains uncertain, leaving stakeholders and experts anxious about the future implications of the stalled global tax deal.