Bermuda is one of 129 countries and jurisdictions to have agreed on a road map aimed at modernising international tax rules for the digital age.

The Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Beps [Base Erosion and Profit Shifting], of which Bermuda is a member, produced a 40-page document that it hopes will be the foundation to creating a global deal on an outline for tax changes by January next year.

The “programme of work” has a particular focus on digital commerce multinationals, who have been able to book profits in low-tax jurisdictions, largely avoiding tax liabilities in the larger economies where most of their users and customers reside.

Alphabet, the parent company of Google, has become a poster child for internet giants’ tax avoidance by channelling tens of billions of dollars in profits to its Bermuda entity, which employs no one.

The road map agreed by the inclusive framework countries at its meeting on May 28 and 29 will be put to to finance ministers of the Group of 20 economic powers next week.

The aim is for international agreement on an outline for the overhaul of cross-border tax rules by early next year, with the more technical negotiations over the details to take place in the months after.

The document sets out two “pillars”. The first is focused on how to divide up rights to tax a company where the good or service is sold even if it does not have a physical presence in the country.

Under the second pillar, if companies are still able to book profits in low-tax jurisdictions, countries could then apply a global minimum tax rate at a level to be determined.

The move comes at a time when international pressure is being ramped up on multinational companies using entities in low-tax jurisdictions to reduce their tax bills.

Bermuda is one of many jurisdictions to have introduced economic substance rules which will require companies in several target sectors to have “adequate” staff, office space and economic activity, or face penalties.

• A copy of the OECD/G20 Inclusive Framework document is attached to the online version of this article at www.royalgazette.com under the heading, Related Media