International community makes important progress on the tax challenges of digitalisation

Unsplash 2019

(Unsplash, 2019)

This article is brought to you in association with OECD.


The international community has made important progress toward addressing the tax challenges arising from digitalisation of the economy and has agreed to continue working multilaterally towards achievement of a new consensus-based long-term solution in 2020, the OECD announced today.

Countries and jurisdictions participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) will step up efforts toward reaching a global solution to the growing debate over how to best tax multinational enterprises in a rapidly digitalising economy.

Renewed international discussions will focus on two central pillars identified in a new Policy Note released after the Inclusive Framework’s January 23-24 meeting, which brought together 264 delegates from 95 member jurisdictions and 12 observer organisations.

The first pillar will focus on how the existing rules that divide up the right to tax the income of multinational enterprises among jurisdictions, including traditional transfer-pricing rules and the arm’s length principle, could be modified to take into account the changes that digitalisation has brought to the world economy. This will require a re-examination of the so-called ‘nexus’ rules – namely how to determine the connection a business has with a given jurisdiction – and the rules that govern how much profit should be allocated to the business conducted there.

The Inclusive Framework will look at proposals based on the concepts of marketing intangibles, user contribution and significant economic presence and how they can be used to modernise the international tax system to address the tax challenges of digitalisation. A second pillar aims to resolve remaining BEPS issues and will explore two sets of interlocking rules designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation.

Given the significance of the new proposals for the international tax system, the Inclusive Framework will issue a consultation document that describes the two pillars in more detail, and a public consultation will be held on 13 and 14 March 2019 in Paris as part of the meeting of the Task Force on the Digital Economy. Further details on the consultation process, including how stakeholders can provide input and most effectively participate, along with the consultation document, will be published in the coming weeks.

“The international community has taken a significant step forward toward resolving the tax challenges arising from digitalisation,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration. “Countries have agreed to explore potential solutions that would update fundamental tax principles for a twenty-first century economy, when firms can be heavily involved in the economic life of different jurisdictions without any significant physical presence and where new and often intangible drivers of value become more and more important.”

“In addition, the features of the digitalised economy exacerbate risks, enabling structures that shift profits to entities that escape taxation or are taxed at only very low rates. We are now exploring this issue and possible solutions,” Mr Saint-Amans said.

Members of the Inclusive Framework renewed their commitment to reaching a consensus-based, long-term solution in 2020, with an update to be presented to the G20 during 2019. In addition to discussions on digitalisation, the Inclusive Framework finalised a report on BEPS Action 5 (Harmful Tax Practices), which has also been released today.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Facts and prejudices about work

WEF Davos 2016 LIVE: “No other problem has jeopardised the EU as much as the refugee question” Joachim Gauck, President of the Federal Republic of Germany, cries out from Davos

10 expert predictions for the next decade in Chinese AI

African cooperation on peace ‘increasingly strong’, Security Council told

Time to make a fundamental choice about the future of healthcare

G20 LIVE: “This was not an attack against France, this was an attack against the universal human values!”, EU President Juncker cries out from G20 in Antalya Turkey

The big challenge of leadership and entrepreneurship in Europe

Why Eurozone needs a bit more inflation

Climate change and health: an everyday solution

This NATO experiment used fake Facebook accounts to trick soldiers into sharing sensitive information

Mergers: Commission approves acquisition of L3 Technologies by Harris Corporation, subject to conditions

The art of care goes beyond borders: one has to understand the individual as a whole

A critical European young voice on Net Neutrality: the distance between Brussels and Washington

India can soar in the robot age. This is how

How the tech world could make nonprofits a more powerful force

Which countries have the highest unemployment rates?

Where is Egypt leading the Middle East and the Mediterranean economy?

The vegan economy is booming – and Big Food wants a slice of it

The dangers of data: why the numbers never tell the full story

How the tech sector can power the shift to a sustainable economy

UN monitoring team in Yemen verifies pullout of armed forces from crucial port zones

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

A young student discusses the determinants of migration in the European Union

The UN supports Europe’s military action in Libya and the Mediterranean; Russia and China agree

Governments should step up their efforts to give people skills to seize opportunities in a digital world

10 months were not enough for the EU to save the environment but 2 days are

This air taxi uses 5G to ‘see’ around corners

Gender Equality as a platform to improve Medicine

The Parliament paves the way for the creation of the European Banking Union

Climate activist Greta Thunberg urges MEPs to put words into action

Here are three ways blockchain can change refugees’ lives

European Citizens’ Initiative: Commission registers ‘End the Cage Age’ initiative

FROM THE FIELD: Watering the parched farmland of São Tomé and Príncipe

In Libya, Guterres ‘deeply concerned’ by risk of fresh military confrontation, urges restraint

Brussels Vs. Google: The €1 bn EU fine and the US response

Service and Sacrifice: Malaysian peacekeepers in Lebanon proud to serve their homeland and the United Nations

World in grip of ‘high impact weather’ as US freezes, Australia sizzles, parts of South America deluged

5 ways to fast-track the transition to a carbon neutral world

EU to spend €6 billion on youth employment and training futile schemes

Suffering of thousands of war-affected Syrian children ‘unprecedented and unacceptable’

Faith can overcome religious nationalism. Here’s how

OECD’s Gurría calls for overhaul of economic thinking to address global challenges

Why today’s leaders need to know about the power of narratives

Youth Forum welcomes positive ruling on non-EU student visas

July was the hottest month ever – what does that actually mean?

Baku forum to push back against ‘rise of hate’ with strong call for cultural and religious tolerance, says UN official

Free and secure access needed in DR Congo conflict zone to tackle Ebola – WHO

The price of centralization of human resources for health

China’s Ambassador to the EU Zhang Ming wishes to Brussels a Happy 2019 Year of the Pig

Ethiopia will soon introduce visa-free travel for all Africans

UN chief hails victory of ‘political will’ in historic Republic of North Macedonia accord

ECB doesn’t dare touch Eurozone’s big banks

UN agencies welcome regional road map to help integrate ‘continuing exodus of Venezuelans’

The essence of care is cosmopolitan

The Schengen area is at a crossroads

WHO and IFMSA as transcendent pillars for world improvement

NHS: A great healthcare system but how accessible is it to migrants?

EU Parliament: A catastrophic crisis management by European leaders

These are the countries that have made their climate commitments law

Gender equality and medicine in the 21st century

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s