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

Under Pillar One Amount A as designed by the OECD/G20 Inclusive Framework, which feature describes the profit reallocation?

Pillar One Amount A reallocates a portion of the residual profit of very large and highly profitable multinational enterprises to market jurisdictions where their customers or users are located, even without physical presence. It is not a withholding tax and does not apply to all MNEs.

  1. AA portion of residual profit of very large and profitable MNEs is reallocated to market jurisdictionsCorrect
  2. BAll profits of every MNE are taxed only in the residence country
  3. CA fixed 15% withholding tax is levied on all cross-border payments
  4. DProfit is reallocated only to low-tax jurisdictions

Explanation

Amount A reallocates a share of residual profit of the largest, most profitable MNEs to market jurisdictions where users or customers are located, regardless of physical presence. It is not a withholding tax and does not apply to all MNEs or favour low-tax countries.

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