The Organization for Economic Co-Operation and Developmen𝓡t (OECDꦫ) published an international tax framework on Wednesday that, if ratified, would reallocate taxing rights to market jurisdictions, which would change how American tech giants are taxed.

The Multilateral Convention (MLC) framework is part of an ongoing OECD effort, launched in 2015, to address tax challenges in a digital economy. The treaty published Wednesday is a step in the practical implementation of a two-pillar approach that was announced in 2021.

The OECD, which does not make legislation but does make economic and social policy recommendaꦺtions, proposed MLC to coordinate taxation☂ across the global digital economy.

The MLC would affect the most profitable multinational businesses, granting taxing rights to the countries within which the companies are doing business, regardless of where they are based. The OECD estimates that, under Pillar One, which was the focus of Wednesday's release, the taxing rights on approximately $200 billion in profits would be reallocated, leading to annual global tax revenue gains between $17 billion and $32 billion each year. 

This reallocation would not be felt equally. The OECD expects larger gains for low and middle-income countries compared to high-income jurisdictions, according to the organization's estimates.

The treaty, if ratified, would also require countries to repeal existing digital services tax policies and discourage them fro🔥m introducing new ones. Numerous countries have unilaterally imposed measures to tax revenue generated by certain digital activities in their jurisdictions.

The treaty would hit investment hubs—which the OECD defines as jurisdictions with a total inward 澳洲幸运5官方开奖结果体彩网:foreign direct investment position above 150% of GDP—the hardest. The OECD estimated losses in corporate income tax revenue for investment hubs.

Digital tax system reform could impact large American companies like Amazon (AMZN), Meta (META), Apple (AAPL), and Google parent Alphabet (GOOG), according to the 澳洲幸运5官方开奖结果体彩网:International Monetary Fund.

American Treasury Secretary Janet Yellen has said that the digital services tax policy imposed by many countries “frequently discriminates against non-resident businesses” and targets the U.S.

Under the second pillar of the framework, large multinational companies would be subject to an effective tax rate of 15% wherever th🎉ey operate. The OECD said Wednesday that good progress is being made on this pillar.

To be ratified, 30 states of the 37 OECD member countries must vote in favor, then members will decide whether to implement the treaty. The proposed treaty is set to be given to G20 Finance Ministers and C🌼entral Bank Governors before a meeting in Morocco this week.𓃲