The New International Tax Regime

9 Pages Posted: 18 Nov 2021 Last revised: 24 Jan 2022

Date Written: October 9, 2021


On October 8, 2021, over 130 countries committed themselves to the most far-reaching changes in the international tax regime since its inception in 1923. Slated to begin on the anniversary year of 2023, this new regime (ITR 2.0) adopts significant changes from the old one (ITR 1.0). Specifically, ITR 2.0 eliminates the physical presence requirement and the arm’s length standard for a significant portion of the profits of large multinationals that have been essential elements of ITR 1.0 since the 1930s, in a way that is more consistent with ITR 1.0’s Benefits Principle (BP). ITR 2.0 also explicitly implements the Single Tax Principle (STP) that has formed part of ITR 1.0 from the beginning but had only been partially implemented. Overall, ITR 2.0 is a victory for the attempts to make multinationals pay their fair share in taxes and to update the ITR for the 21st century.

Keywords: International Tax Regime, BEPS, OECD

JEL Classification: H26

Suggested Citation

Avi-Yonah, Reuven S., The New International Tax Regime (October 9, 2021). U of Michigan Public Law Research Paper No. 21-031, U of Michigan Law & Econ Research Paper No. 21-031, Available at SSRN: or

Reuven S. Avi-Yonah (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

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