By Julie Martin, MNE Tax
G20 leaders, at their summit in Osaka, Japan, on June 28–29 endorsed a work plan developed by a 129-country coalition called the “Inclusive Framework on BEPS” which sets out a process for reaching a global consensus on revised rules for taxing multinational groups.
“We welcome the recent progress on addressing the tax challenges arising from digitalization and endorse the ambitious work program that consists of a two-pillar approach, developed by
the Inclusive Framework on BEPS. We will redouble our efforts for a consensus-based solution with a final report by 2020,” the group said in a Leaders’ Declaration released after the summit.
The work plan, published May 31, uses two pillars as a launching point for discussions on a new international tax system for taxing multinationals. The aim is to reach worldwide agreement international tax reform by the end of 2020
Under the first pillar, countries will consider whether more multinational enterprise profit should be taxed in countries where the multinational’s clients or users are located, and if so, how much profit should be allocated.
Under the second pillar, the global anti-base erosion or GloBE proposal, countries will explore the possible introduction of a coordinated worldwide minimum tax and a tax on base eroding payments to reduce the incentive for profit shifting by multinational groups.
OECD, which is leading the Inclusive Framework’s work, presented the work plan in a report to G20 leaders prepared for the meeting.
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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The OECD and G20 digital proposal has too many variables and very short deadlines for the proposal to be successful. Nevertheless, the G20 approval June 28-29 pushes the digital proposal forward. An important step in the process.