On October 3, 2023, the OECD announced that the Inclusive Framework on BEPS had concluded negotiations, resulting in the development of the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (the “Convention”).
The purpose of the Convention is to facilitate the coordinated and consistent implementation of the subject to tax rule (“STTR”) in certain existing tax conventions.
STTR, which is an integral part of the Pillar 2 initiative, will allow source countries to tax certain intra-group income of a nonresident recipient when it is subject to corporate income tax below 9% in the recipient’s country.
On July 4, 2024, a draft resolution of the Government of the Republic of Kazakhstan “On Signing of the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule” was presented for public discussion. The period for the discussion is until July 19, 2024.
After the Convention comes into effect with respect to Kazakhstan's tax conventions, tax agents will need to consider the STTR when making certain intra-group payments to nonresidents.
We continue monitoring changes related to the implementation of Pillar 2 and would be glad to discuss the potential impact of these changes on your business.
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