Skip to content

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

Taprobane Streaming Inc., a non-resident with no permanent establishment in India, provides online services to Indian users. Under the Pillar One Amount A proposal, which feature best describes the reallocation of taxing rights?

Pillar One Amount A reallocates part of the residual profit of very large and highly profitable multinational enterprises to market jurisdictions where customers or users are located, even without physical presence there. It is a nexus and profit allocation reform, not a flat withholding tax or a minimum tax.

  1. AA share of residual profit of very large, highly profitable MNEs is allocated to market jurisdictions regardless of physical presenceCorrect
  2. BProfits are taxed only in the country of the parent company irrespective of sales location
  3. CA fixed 15% withholding tax is levied on all cross-border payments
  4. DTaxing rights are shifted to the jurisdiction with the lowest tax rate

Explanation

Amount A reallocates a portion of residual profit of the largest and most profitable MNEs to market jurisdictions where users or customers are located, without requiring physical presence. It does not confine taxation to the parent's country, nor is it a flat withholding tax. The 15% figure belongs to Pillar Two, and shifting to low-tax jurisdictions is contrary to its aim.

Did you get it right without looking?

One question tells you little. A timed set on Latest Developments in International Taxation shows your real accuracy, how long you take and where you lose marks.

Practise Latest Developments in International TaxationFree diagnostic mock

More Latest Developments in International Taxation questions