Countries Agree on Tool to Implement Global Tax Pact Rules (1)

The OECD announced Tuesday that countries involved in the global tax deal negotiations have agreed on a multilateral convention to implement a rule aimed at helping developing countries collect more tax under treaties that set low withholding rates.

The rule, known as the subject-to-tax rule, will allow companies to tax certain intra-group payments where they are taxed below a 9% corporate income tax rate. The STTR allows so-called “source jurisdictions"—countries where the payments are made—to tax these transactions where they’d otherwise be unable to do because of existing bilateral treaty restrictions.

Work on the STTR is part of the international ...