International community renews commitment to multilateral efforts to address tax challenges from digitalisation of the economy

digital

(Credit: Unsplash)

This article is brought to you in association with OECD.


The international community reaffirmed its commitment to reach a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy, and will continue working toward an agreement by the end of 2020, according to the Statement by the Inclusive Framework on BEPS released by the OECD today.

The Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, decided during its Jan. 29-30 meeting to move ahead with a two-pillar negotiation to address the tax challenges of digitalisation.

Participants agreed to pursue the negotiation of new rules on where tax should be paid (“nexus” rules) and on what portion of profits they should be taxed (“profit allocation” rules), on the basis of a “Unified Approach” on Pillar One, to ensure that MNEs conducting sustained and significant business in places where they may not have a physical presence can be taxed in such jurisdictions. The Unified Approach agreed by the Inclusive Framework draws heavily on the Unified Approach released by the OECD Secretariat in October 2019.

Endorsement of the Unified Approach is a significant step, as until now Inclusive Framework members have been considering three competing proposals to address the tax challenges of digitalisation. A Programme of Work agreed in May 2019 has been replaced with a revised Programme of Work under Pillar One, which outlines the remaining technical work and political challenges to deliver a consensus-based solution by the end of 2020, as mandated by the G20. Inclusive Framework members will next meet in July in Berlin, at which time political agreement will be sought on the detailed architecture of this proposal.

The Statement by the Inclusive Framework on BEPS takes note of a proposal to implement Pillar One on a “safe harbour” basis, as proposed in a December 3, 2019 letter from US Treasury Secretary Steven Mnuchin to OECD Secretary-General Angel Gurría. It recognises that many Inclusive Framework members have expressed concerns about the proposed “safe harbour” approach. The Statement also highlights other critical policy issues that must be agreed under Pillar One before a decision can be taken. The “safe harbour” issue is included in the list of remaining work, but a final decision on this issue will be deferred until the architecture of Pillar One has been agreed upon.

The Inclusive Framework also welcomed the significant progress made on the technical design of Pillar Two, which aims to address remaining BEPS issues and ensure that international businesses pay a minimum level of tax. They noted the further work that needs to be done on Pillar Two.

“It is more urgent than ever that countries address the tax challenges arising from digitalisation of the economy, and the only effective way to do that is to continue advancing toward a consensus-based multilateral solution to overhaul the international tax system,” said OECD Secretary-General Angel Gurría. “We welcome the Inclusive Framework’s decision to move forward in this arduous undertaking, but we also recognise that there are technical challenges to developing a workable solution as well as critical policy differences that need to be resolved in the coming months.”

“The OECD will do everything it can to facilitate consensus, because we are convinced that failure to reach agreement would greatly increase the risk that countries will act unilaterally, with negative consequences on an already fragile global economy,” Mr Gurría said.

The Inclusive Framework’s tax work on the digitalisation of the economy is part of wider efforts to restore stability and increase certainty in the international tax system, address possible overlaps with existing rules and mitigate the risks of double taxation.

The ongoing work will be presented in a new OECD Secretary-General Tax Report during the next meeting of G20 finance ministers and central bank governors in Riyadh, Saudi Arabia, on 22-23 February.

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

Visa liberalisation: Commission reports on fulfilment of visa-free requirements by Western Balkans and Eastern Partnership countries

Don’t dismiss start-ups founded by millennials. This is how they succeed

Parliament leads the way on first set of EU rules for Artificial Intelligence

EU growth in 2015 to be again sluggish; Can the Juncker Commission fight this out?

End ‘shame, isolation and segregation’ of fistula sufferers, urges UN reproductive health chief

Is this a turning point in the fight against slavery?

How to close the gender pay gap in three steps

On Google antitrust case: “Let’s face it, some companies want to hurt Google and it goes as simple as that”

The digital revolution will transform the steel industry

The Commission offers exit from the EU budget stalemate

These 11 companies are leading the way to a circular economy

EU and Airbus Member States take action to ensure full compliance in the WTO aircraft dispute

Antitrust: Commission fines car parts suppliers of € 18 million in cartel settlement

Soil pollution ‘jeopardizing’ life on Earth, UN agency warns on World Day

MWC 2016 LIVE: Orange targets VoLTE and Voice over Wi-Fi; strikes Google partnership

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

Humanitarian visas would reduce refugees’ death toll

EU budget for 2021-2027: Commission welcomes provisional agreement on Horizon Europe, the future EU research and innovation programme

IMF asks Europe to decide on bank resolutions and the Greek Gordian knot

Healthcare guidance apps to professional’s continued education?

ILO warns of widespread insecurity in the global labour market

World-famous cultural institutions closed due to coronavirus are welcoming virtual visitors

Trade with the United States: Council authorises negotiations on elimination of tariffs for industrial goods and on conformity assessment

Green Deal: Commission adopts new Chemicals Strategy towards a toxic-free environment

The London City-EU connection holds despite of Brexit and the ban of LSE-Deutsche Börse merger

Coronavirus: a cultural escape goat or the next Big Five

EU Emissions Trading System does not hurt firms’ profitability

These EU countries have the most government debt

Conditions deteriorating alarmingly in Yemen, warns senior UN official

DR Congo: Restore internet services as ‘a matter of urgency’, urges UN expert

UN celebrates books as ‘bridges across cultures’

Tackle ‘tsunami of hatred’ across the world urges Guterres, to counter anti-Semitism, racism and intolerance

EU leaders slammed on anti-tax evasion inaction and expensive energy

EU to Telcos: Stop Mergers and Acquisitions but please help me urgently with 5G development

China-EU Summit on 16-17 July 2018: “Work together to address common challenges”, by China’s Ambassador to the EU

How can we measure real progress on the Sustainable Development Goals?

UN health agency highlights lifestyle choices that can prevent onset of dementia, as millions more succumb each year

Brexit: European Commission intensifies preparedness work and outlines contingency action plan in the event of a no deal scenario with the UK

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

Landmark agreement will protect 100 European Geographical Indications in China

Could switching between summer and winter time end in 2021?

Greferendum: the biggest political gaffe in western modern history to tear Europe apart? #Grexit #Graccident

“Financial crisis will not happen in China!”, the Chinese Premier underlines from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

A brief history of cryptography and why it matters

State aid: Commission opens investigation into proposed public support for Peugeot plant in Spain

Escalation in Syria fighting cause for ‘great concern’ says UN chief, dozens more civilians dead or injured

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

Last year, this coral reef was teeming with life. Now it’s dying – and it’s up to us to save it

Free flow of non-personal data: Parliament approves EU’s fifth freedom

UN chief welcomes ‘positive steps’ towards peace between Eritrea and Ethiopia

After swallowing effortlessly the right to be forgotten time for Google Ads now to behave

Respect people’s peaceful assembly and fair trail rights, UN human rights wing urges Nicaragua

‘Refrain from violence’ UN chief urges, as presidential election result is announced in DR Congo

We spend half our time at work in meetings – and that’s not necessarily a bad thing

“911, What’s your emergency?”

Why the ECB had to clarify it caters for the entire Eurozone not just Germany?

Amid ‘volatile’ environment, UN mission chief urges Iraqi leaders to ‘listen to the voice of the people’

Why activist athletes are needed today more than ever

EU Emergency Trust Fund for Africa: new actions of almost €150 million to tackle human smuggling, protect vulnerable people and stabilise communities in North Africa

Why Africa must be ready to take the quantum leap

More Stings?

Advertising

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