In September 2023, the OECD/G20 Inclusive Framework on BEPS concluded negotiations on the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule ("STTR Multilateral Instrument" or "STTR MLI"). The STTR MLI can swiftly implement the Pillar Two Subject to Tax Rule in existing bilateral tax treaties without the need for bilateral negotiations.
A key part of the OECD/G20 BEPS Project is addressing the tax challenges arising from the digitalisation of the economy. In October 2021, over 135 jurisdictions joined a ground-breaking plan – the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy – to update key elements of the international tax system which is no longer fit for purpose in a globalised and digitalised economy. The Global Anti-Base Erosion Model Rules and the STTR are key components of Pillar Two of this plan and ensure multinational enterprises pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. More specifically, the STTR is a treaty-based rule that protects the right of developing Inclusive Framework members to tax certain intra-group payments, where these are subject to a nominal corporate income tax that is below the minimum rate. This new multilateral instrument, which the Inclusive Framework has delivered as part of its Outcome Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy in July 2023, will be an efficient tool countries could use to implement the subject to tax rule in their existing bilateral tax treaties.
The STTR MLI is open for signature and jurisdictions interested in signing it are invited to contact the OECD Secretariat: email@example.com
Text of the STTR MLI
Explanatory Statement of the STTR MLI
Report on Subject to Tax Rule (Pillar Two)
Published in July 2023, this report contains the model treaty provision to give effect to the STTR, together with an accompanying commentary explaining the purpose and operation of the STTR.
STTR MLI at a glance
Frequently Asked Questions