Comments must be received by December 14.
The OECD Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, has agreed that the two-pillar approach they have been developing since 2019 provides a solid foundation for a future agreement.
During its meeting held on October 8-9, 2020, members of the Inclusive Framework on BEPS said that the blueprints of the two-pillar approach reflect convergent views on key policy features, principles, and parameters for a future agreement. They identified remaining political and technical issues where differences of views remain to be bridged, and next steps in the multilateral process.
Participants approved for public consultation a new Blueprint for Pillar One of the project, which would establish new rules on where tax should be paid (“nexus” rules) and a fundamentally new way of sharing taxing rights between countries. The aim is ensuring that digitally-intensive or consumer-facing MNEs pay taxes where they conduct sustained and significant business, even when they do not have a physical presence, as is currently required under existing tax rules.
Participants also approved for public consultation a new Blueprint for Pillar Two of the project, which would introduce a global minimum tax that would help countries around the world address remaining issues linked to base erosion and profit shifting by MNEs.
Comments must be received by December 14.
OECD Secretary-General Angel Gurría said: “It is clear that new rules are urgently needed to ensure fairness and equity in our tax systems, and to adapt the international tax architecture to new and changing business models. Without a global, consensus-based solution, the risk of further uncoordinated, unilateral measures is real, and growing by the day. It is imperative that we take this work across the finish line. Failure would risk tax wars turning into trade wars at a time when the global economy is already suffering enormously.”
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com
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