In a step towards adapting Monegasque law to international standards, the Prince’s Government submitted a bill to the National Council concerning the introduction of a minimum tax applicable to multinational enterprise groups. The draft outlines a minimum effective tax rate of 15% applicable to multinational groups of companies whose consolidated turnover exceeds 750 million euros.
The new draft bill is in accordance with a standard developed by the Organization for Economic Co-operation and Development (OECD).
According to the Prince’s Government, the law would preserve the financial interests of the Principality and guarantee its competitiveness in a constantly evolving tax environment:
“Contrary to some misconceptions, this reform does not create a new tax burden for the multinational groups concerned. If not implemented in the Principality, the additional tax in question could be levied by other jurisdictions participating in Pillar 2 (the second element of the OECD’s two-part global tax deal, promotes a global minimum corporate income tax rate of 15 percent for multinational corporations with a ‘significant economic footprint’) where these groups have a subsidiary or parent company,” states a recent press release by the Prince’s Government.
The draft bill aims to give Monaco more fiscal sovereignty by ensuring that tax revenues corresponding to activities carried out on its territory are submitted to the Principality rather than to foreign jurisdictions.
“This system will also contribute to the attractiveness of the Principality because, for the companies concerned, having a framework recognized by the OECD will avoid additional administrative procedures and compliance obligations that could have weighed on their establishment in Monaco,” states a recent press release by the Prince’s Government.
The OECD is an international organization that has been working closely with policy makers, stakeholders and citizens for 60 years to establish evidence-based international standards and to find solutions to social, economic and environmental challenges. From improving economic performance and strengthening policies to fight climate change, to bolstering education and fighting international tax evasion, the OECD is a knowledge hub for data, analysis and public policy.
According to the Prince’s Government, this new reform will be fully in line with the Principality’s ongoing commitment to transparency and international tax fairness.
