SC & G-24 Special Issue 2, July 2025
Analysing the Impact of UN and OECD Subject to Tax Rule for G-24 and South Centre Member States
By Suranjali Tandon and Chetan Rao
The Subject to Tax Rule (STTR) is meant to address base erosion and profit shifting in cross –border transactions. The United Nations (UN) and Organisation for Economic Co-operation and Development (OECD)/Group of Twenty (G20) Inclusive Framework have developed models of the STTR that countries may choose to adopt in their treaties. This paper provides a review of these designs of two STTR models and proceeds to estimate the revenue gains for the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G-24) and South Centre Member States that may arise from a STTR that covers different kinds of payments. The OECD STTR is limited to related-party payments and imposes thresholds based on mark-up and materiality, reducing its applicability in practice. In contrast, the UN STTR offers broader coverage, applies to both related and unrelated parties, and does not impose restrictive thresholds, making it more administratively feasible for developing countries. Although the estimated gains from the OECD STTR appear modest due to its narrow scope, the UN STTR shows greater potential. The analysis also highlights data limitations and the need for access to microdata for accurate country-level assessments.
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Analysing the Impact of UN and OECD Subject to Tax Rule for G-24 and South Centre Member States
This article was tagged: Global Minimum Tax, Global Tax, Global Taxation, Intergovernmental Group of Twenty Four (G-24), International Tax, International Tax Cooperation, International Tax Reform, International Taxation, Organisation for Economic Co-operation and Development (OECD), Pillar Two, Subject to Tax Rule (STTR), Tax, Tax Cooperation, Tax Law, Tax Policy, Tax Reform, Tax Revenue Mobilization, Taxation, Taxing Rights, United Nations (UN)
