PARIS (Reuters) - New cross-border corporate tax rules could yield about a quarter of a trillion dollars in extra revenue for governments, more than previously expected, the Organisation for Economic Cooperation and Development estimated on Wednesday.
Nearly 140 countries are preparing to implement next year a 2021 deal on government's rights to tax multinationals in order to take account of the emergence of big digital companies such as Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN), which can book profits in low-tax countries.
The first pillar of the two-track reform aims to re-allocate 25% of profits from the world's largest multinationals for taxation in the countries where their clients are, regardless of the companies' physical location.
The second pillar aims to set a global minimum corporate tax rate of 15% by allowing governments to apply a top-up tax to that level on any profits booked in a country with a lower rate.
The OECD estimated that the minimum tax would yield $220 billion, or 9% of global corporate income tax - up from a previous estimate of $150 billion.
Meanwhile, the re-allocation of taxing rights under the first pillar of the reform was now expected to cover $200 billion in multinationals' profits, up from $125 billion previously.
The increase was mainly due to higher multinational profits now than a couple of years ago, with 50% coming from large digital groups, the OECD said.
As a result of more profit being covered, the second pillar was now seen generating tax gains of between $13 billion and $36 billion.
While developing countries have criticised the reform over concerns that they could lose out, the OECD's updated analysis found that low- and middle-income countries would gain the most from the re-allocation of taxing rights.
At the same time, low-tax investment hubs where multinationals have booked their profits until now would end up surrendering more taxing rights than they are allocated, the OECD said.