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CA Final · Direct Tax Laws & International Taxation · Latest Developments in International Taxation

Case: Bharat Textiles Ltd, an Indian company, had an international transaction with its associated enterprise. Under Pillar One, Amount A aims to reallocate taxing rights. Which group of MNEs is intended to fall within the scope of Amount A as per the OECD framework?

Amount A of Pillar One covers very large, highly profitable multinationals with global turnover above EUR 20 billion and profitability above 10%. The EUR 750 million threshold belongs to Pillar Two, not Pillar One.

  1. AAll MNEs with any cross-border transactions
  2. BMNEs with global turnover above EUR 20 billion and profitability above 10%Correct
  3. CMNEs with turnover below EUR 750 million
  4. DOnly domestic companies with digital businesses

Explanation

Amount A applies to very large and highly profitable MNEs, with global turnover above EUR 20 billion and profit before tax margin above 10%. Of the residual profit above 10%, 25% is reallocated to market jurisdictions. The EUR 750 million threshold relates to Pillar Two.

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