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Thursday, 28.03.2024, 16:22
Digitalised economy: OECD efforts to address tax challenges
The new OECD proposal brings together common elements of
three competing proposals from member countries of the “OECD/G20 Inclusive
Framework on BEPS”, which groups 134 countries and jurisdictions on an equal
footing for multilateral negotiation of international tax rules, making them
fit for purpose for the global economy of the 21st century.
The OECD proposal in: http://www.oecd.org/tax/beps/public-consultation-document-secretariat-proposal-unified-approach-pillar-one.pdf
On BEPS see: http://www.oecd.org/tax/beps/
According the proposal, some profits and corresponding
taxing rights would be re-allocated to countries and jurisdictions where multi-national
enterprises, MNEs have their markets. It would ensure that MNEs
conducting significant business in places where they do not have a physical
presence be taxed in such jurisdictions, through the creation of new rules stating
(1) where tax should be paid (“nexus” rules) and (2) on what portion of profits
they should be taxed (“profit allocation” rules).
The OECD Secretary-General, Angel Gurría underlined that the
new proposal would make real progress to address the tax challenges arising
from digitalisation of the economy, and to continue advancing toward a
consensus-based solution to overhaul the rules-based international tax system
by 2020. The proposal would bring together common elements of existing
competing proposals, involving over 130 countries, with input from governments,
business, civil society, academia and the general public, as well as bringing closer
to the OECD’s ultimate goal, i.e. to ensure that all MNEs pay their fair share.
”Failure to reach agreement by 2020 would greatly increase
the risk that countries will act unilaterally, with negative consequences on an
already fragile global economy; we must not allow that to happen,” Mr. Gurría
said.
Taxation in digital economy
The OECD’s inclusive framework’s tax work on the
digitalisation of economy is part of wider efforts to restore stability and
certainty in the international tax system, address possible overlaps with
existing rules and mitigate the risks of double taxation. Beyond the specific elements
on reallocating taxing rights, a second pillar of the work aims to resolve
remaining BEPS issues, ensuring a minimum corporate income tax on MNE profits.
This will be discussed in a public consultation foreseen to take place in
December 2019.
The OECD’s ongoing tax work will be presented in a new OECD
Secretary-General Tax Report during the next meeting of G-20 Finance Ministers
and Central Bank Governors in Washington DC, on 17-18 October.
For more information on the OECD/G20 BEPS Project, see: www.oecd.org/tax/beps/