The global community is finally planning to move away from the century-old international tax system. What does this mean for multinational corporations and tax havens?
Meanwhile, how is legaltech shaping up in 2021? All this, and much more, when you scroll below 👇
1. The New Global Tax Agreement
2. How Facebook Is Building LegalOps, Diversity, And More?
3. LegalTech Trends 2021
4. Data-Driven Contracts With SpotInsights
5. Other Stories Shaking Up Legal In October
Over 130 countries, representing 90% of global GDP, agreed to a new two-pillar framework for international tax reform proposed by the Organization for Economic Co-Operation and Development (OECD).
Pillar One of the framework will allow countries to tax multinational corporations operating in their jurisdiction, regardless of whether the business has a physical presence there.
Pillar Two calls for a global minimum corporate tax of 15%. However, this tax slab will only apply to MNCs generating annual revenues above $868 million.
First, the current international tax system is obsolete and is not optimized for a modern digital economy.
Second, large companies are notorious for shopping around for competitive tax rates among low-tax countries. For example Apple, Facebook, and Google have set up their European headquarters in Ireland because of a very low corporate tax rate.
Finally, countries have no claim over the profits earned by digital companies selling goods and services in their markets, unless the business has a physical presence in the country.
The deal will also address the problem of tax havens to an extent by enforcing a tax floor on competition over corporate income tax.
The OECD estimates that an additional $150 billion in taxes can be collected once the global corporate minimum tax is enforced.
It will unlock a fairer distribution of profits for countries allowing digital MNCs to operate in their markets.
The global tax overhaul will take effect in 2023.
Akshay Verma, Director - Head of Legal Operations at Facebook, discusses how the world’s largest social network is transforming legal operations and spearheading diversity in legal among other things in episode #9 of LegalMatters by SpotDraft.
Entering the final quarter of 2021, things are looking tremendously positive for legaltech. A study by The Association of Corporate Counsel’s and Exterro surveyed 250 in-house counsel and legalops professionals across 18 countries. This is what they found:
- Nearly two-thirds of the respondents believe that legaltech is now a must-have.
- Of a list of 14 technologies, respondents ranked matter management, e-billing, and contract management as the most effective technologies for their legal department.
- 77% of respondents want to leverage technology to improve contract management, followed by 40% for data privacy and 25% for litigation activities.
- A majority of respondents are looking for legal software that is simple to use, and support interoperability and automation.
- More than 50% of respondents are planning to purchase legal software in the next 12 months.
Do you ever wonder how many contracts your legal team works on in a quarter? Or how much time it takes to complete a contract from start to finish?
With SpotInsights, you now can. This one-of-a-kind dashboard tracks contract metrics at a granular level, helping you drill down and demonstrate the impact of legal’s performance across org-wide contracts.
This tool not only allows you to cultivate a data-first culture in-house but also enables you to identify bottlenecks in the contracting process and improve the efficiency of the company at large.
The US Department of Justice sets up a National Cryptocurrency Enforcement Team amid rising crypto-related criminal activity.
Pandora Papers saga continues as it casts a light on the offshore deals and assets of the global rich.
With that, we come to an end with this month’s SpotDigest. We’ll catch you in the next one, until then take care and stay well!