As published on tax-news.com, Thursday February 6, 2020.
The OECD is to host a webcast on February 13, 2020, to present its analysis of the potential impact of its proposals for international tax reform to address the tax challenges arising from the digitalization of the economy.
The OECD has been carrying out an economic analysis and impact assessment of the Pillar 1 and Pillar 2 proposals. During the webcast, scheduled for February 13 15:00-16:00 Central European Time, experts from the OECD's Centre for Tax Policy and Administration and Economics Department will present the preliminary results on the revenue and investment effects of the proposals.
In May 2019 the Inclusive Framework agreed a Program of Work for Addressing the Tax Challenges of the Digitalization of the Economy. The Program of Work is divided into two pillars:
Pillar One addresses the allocation of taxing rights between jurisdictions and considers various proposals for new profit allocation and nexus rules;
Pillar Two (also referred to as the "Global Anti-Base Erosion" or "GloBE" proposal) calls for the development of a co-ordinated set of rules to address ongoing risks from structures that allow MNEs to shift profit to jurisdictions where they are subject to no or very low taxation.
The OECD's GloBE proposal is designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation. The proposal looks to minimize tax base erosion and profit shifting by ensuring that income is not inappropriately shifted to territories that levy no or low tax rates, by ensuring that income is subject to at least a minimum level of tax, wherever that may be. This would involve the introduction of a new effective tax rate test, which would also enable stakeholders to better determine in a harmonized way how much tax multinationals pay internationally, the OECD has proposed.
The OECD intends that the GloBE proposal will operate as a top-up to an agreed fixed rate. The actual rate of tax to be applied under the GloBE proposal will be discussed once other key design elements of the proposal are fully developed, the OECD has said.