by Julie Martin
Speaking at the 2018 OECD International Tax Conference, held June 4–5 in Washington, Pascal Saint-Amans, Director, Centre for Tax Policy and Administration sought to clear up confusion regarding the timing of an OECD-led effort to achieve consensus among countries on a common approach for taxing of multinational digital firms.
Saint-Amans said that recent comments made by the OECD Secretary-General had been incorrectly reported by some in the media. The OECD will to seek to achieve consensus among countries on these contentious tax issues by 2020, not by 2019, Saint-Amans said. Of course, if countries can agree by 2019, the OECD would be happy to oblige, Saint-Amans said; however, he said this seems unlikely. The report will be “a final report, possibly including solutions,” Saint-Amans said.
Saint-Amans said the OECD Secretariat will also produce an interim report in 2019 during the Japanese presidency of the G20. The OECD would not be bound to achieve unanimity or consensus in the wording of this report, though, Saint-Amans told the conference, which was sponsored by the OECD, USCIB, and BIAC.
The co-chairs of OECD’s Task Force on the Digital Economy (TFDE), Brian Jenn, Deputy International Tax Counsel at US Treasury and Gaël Perraud, Director of International Taxation and European Affairs at France’s Ministry of Economy and Finance, discussed the contents of an OECD’s interim report on the digital economy, delivered last March, which revealed there was no consensus among countries on how to update the international tax rules to account for digital firms. The co-chairs discussed the contents of the March report at the conference, offering no new announcements on the status of country negotiations.
Saint-Amans said countries fall into three broad groups regarding their outlook on these tax issues: those that see no need to change the existing system; those that believe the existing international tax standards must change because of the unique features of the digital economy; and those countries, such as the US, that are open to discussing improvements to the international tax rules for allocating income, but only if the discussion is not limited to taxation of digital firms.
During a separate panel, Martin Kreienbaum, Germany’s Director General, International Taxation, Federal Ministry of Finance, and Chair, OECD Committee on Fiscal Affairs said that to resolve the worldwide dispute on taxing the digital economy, it is important to first clearly identify the nature of the problem.
Kreienbaum said that at a recent informal meeting of EU ministers almost every official expressed concerns about multinational profit shifting, saying they wanted to be certain there was overall effective taxation of digital businesses to level the playing field. At the same time, though, the ministers also believed their own countries should be allocated more taxing rights, he said. The true nature of the dispute must be clarified before progress can be made, he said.
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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