Recently, the term ‘two-pillar solution/two-pillar package' often seen

Recently, the term ‘two-pillar solution/two-pillar package’ often seen in the news, refers to

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Global energy security in near future

International cyber crime reporting

Minimum global corporate tax

Prevention of international money laundering

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This question was previously asked in

UPSC CDS-1 – 2022

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The term ‘two-pillar solution/two-pillar package’ refers to the international agreement being negotiated under the OECD/G20 framework to address tax challenges arising from the digitalization of the economy, specifically focusing on a global minimum corporate tax.

– Pillar One is about reallocating a portion of the profits of large multinational enterprises (MNEs) from their home countries to the market jurisdictions where their consumers are located, regardless of physical presence.
– Pillar Two introduces a global minimum corporate tax rate, primarily set at 15%, to ensure that MNEs pay a minimum level of tax on their profits, regardless of where they are headquartered or operate.

– The aim of the two-pillar solution is to make the international corporate tax system fairer, more stable, and better suited to the modern globalized and digitalized economy.
– It seeks to prevent tax base erosion and profit shifting by MNEs and reduce tax competition among countries.

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