PARIS (Reuters) – The Organization for Economic Co-operation and Development (OECD) presented on Wednesday the text of a multilateral convention which, if ratified by a sufficient number of countries, will replace the distribution of tax revenues linked to digital technology.

The publication of the text puts pressure on the United States in particular, where a majority equivalent to two-thirds of the deeply divided Senate is needed to ratify the convention.

The document constitutes the first pillar of a two-part revision of the rules relating to the cross-border taxation of multinational companies, which was approved in 2021 by nearly 140 countries, but whose implementation is proving slow and complicated.

Many countries complain about the fragmentation of the global tax system, which allows multinationals – particularly large US technology companies – to pay little tax in jurisdictions where they have large turnovers, and some have therefore introduced their own digital taxes, despite opposition from Washington.

The convention codifies how governments must reallocate tax revenues on around $200 billion (around 188.7 billion euros) in profits from the largest and most profitable multinationals to the countries where their sales take place.

The Paris-based OECD estimates that this reallocation will generate additional tax revenues of around $17 billion to $32 billion globally, with low- and middle-income countries benefitting the most.

If ratified, the convention would require countries that have national taxes on digital services – or are planning to introduce them – to abandon them.

Washington is particularly sensitive to this issue because many of these taxes were put in place to target large American digital companies such as Google, Amazon and Apple.

To enter into force, the convention must be ratified by the 30 countries hosting at least 60% of the multinationals concerned, which means that the United States must join it.

Manal Corwin, director of the OECD Center for Tax Policy and Administration, said failure to ratify the text could have “serious consequences”, including the proliferation of the use of digital services taxes as well as commercial retaliation.

“In my view, this also threatens the stability of the broader international system, on which countries and businesses have long depended,” Manal Corwin added to reporters.

The second pillar of the OECD’s 2021 international tax reform sets a minimum corporate tax rate of 15%, which countries are supposed to start implementing next year.

(Reporting Leigh Thomas, Stéphanie Hamel, editing by Kate Entringer)

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