by Julie Martin
The Inclusive Framework in BEPS, a coalition of 113 countries, has approved an interim report addressing tax challenges associated with the digital economy, Pascal Saint-Amans, director of the OECD’s centre for tax policy and administration, announced on Twitter yesterday evening.
It is expected that the report will be released publically on March 16.
OECD tax officials will discuss the contents of the report during an OECD Tax Talks webinar, also slated for tomorrow, Saint-Amans said. There is still time to register for this event.
The #OECD Inclusive Framework has approved the interim Report on the tax challenges of the digital economy. To be delivered to G20 finance ministers! Stay tuned. More to come at our webcast on Friday. @OECDtax
— Pascal Saint-Amans (@PSaintAmans) March 14, 2018
The interim report has been widely anticipated as countries have begun to consider enacting special tax rules addressing the digital economy, believing they are losing corporate tax revenue because firms can take advantage of outdated international tax rules. It had been hoped that the OECD would bring countries together to reach a common solution, preventing uncoordinated unilateral measures which could lead to double taxation of multinational firm profits.
Though the agreement has been reached on the text, many parts of the document may merely state that countries have “agreed to disagree.”
Speaking at a late February tax conference, Chip Harter, Deputy Assistant Secretary (International Tax Affairs) at the US Department of the Treasury said that the US does not believe there is a need for separate rules addressing the digital economy, and reported that the interim report would reflect that.
The US’s view is that the bulk of the controversy lies with existing international tax rules defining permanent establishments and the profit attribution standards. While the US is open to discussing revisions in these two areas, it insists that any changes should apply to all businesses, not as part of a special regime limited to digital companies premised on the fact that they are different.
The EU is working on its own proposal to tax the digital economy and the UK released an updated position paper on the issue earlier this week.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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