By Julie Martin, MNE Tax
A group of countries known as the Inclusive Framework on BEPS today agreed to a work plan to develop international tax and transfer pricing rules that address the problems caused by digitalization, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, announced on Twitter.
The agreement was reached by the 129-country coalition at their 7th meeting, held in Paris.
Saint-Amans said the 30+ page work plan will be released publically on May 31 and presented to G2o finance ministers for political endorsement during their June 8–9 meeting, in Fukuoka, Japan.
The work plan will then be delivered to G20 leaders for approval at their June 28–29 meeting in Osaka, Japan.
The programme of work to address the tax challenges of the digitalization of the economy just approved by the Inclusive framework. Congrats to the 129 members! The document (30+pages) will be released on Friday and presented to the #G20 for their endorsement next week in Fukuoka.
— Pascal Saint-Amans (@PSaintAmans) May 28, 2019
The OECD is leading an effort to reach consensus among countries on an update to the international tax rules for allocating income among multinational groups. The goal is to reach an agreement by the end of 2020.
The project seeks to respond to concerns by some countries that multinational firms are undertaxed because they can take advantage of outdated rules.
While the discussion began by focusing exclusively on digital firms’ ability to skirt the tax laws, and continues to be described as an effort to address the tax problems caused by “digitalization,” the debate has since expanded to a discussion about whether the international tax rules for allocating income should change for all types of multinationals.
The OECD on February 13 presented a paper with policy options as a launching point for the discussion. The paper became the subject of the two-day Paris consultation.
The discussion draft proposals fall into two different “pillars.” Pillar one proposals would change the rules for allocating multinational group profits between countries to grant greater taxing rights over multinational group profit to countries where users or purchasers are located. The pillar two proposals call for coordinated minimum taxation on multinationals worldwide.
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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Great..!! Look forward to the said 30+ pages document. Regards.
In my view, Pillar one proposal viz. rules for allocating multinational group profits between countries to grant greater taxing rights over multinational group profit to countries where users or purchasers are located… is not line with taxing the profit where the value creation happens or substance lies, as currently envisaged by BEPS framework… your views please.