CCAB-I responds to OECD/G20 Pillar One and Two consultation

Dec 21, 2020

The CCAB-I responded to the OECD/G20’s public consultation on its latest tax reform proposals “Pillar One and Pillar Two”.  The OECD/G20 Inclusive Framework on BEPS is tasked with developing an internationally acceptable solution to the tax challenges of the digitalisation of the global economy. On 12 October 2020, the Inclusive Framework released a package consisting of reports on the Pillar One Blueprint and the Report on the Pillar Two Blueprint.  Pillar One proposes to allocate a greater share of MNC profits to market/user jurisdictions.  The current scope of Pillar One applies to digitalised businesses and consumer-facing companies with cross-border activity.  Pillar Two proposes to address harmful tax practices by ensuring that all large companies pay a minimum level of tax on income regardless of where it arises. 

The observations of the CCAB-I in response to the consultation can be summarised as follows:

  • Further public consultations are necessary on the next draft of Pillar One and Pillar Two proposals.
  • Plans to reach political consensus on the proposals by mid-2021 are over-ambitious and rushed. Stakeholders need time to analyse and respond to further iterations of the proposals.
  • The technical workings of Pillar One and Pillar Two are highly complex and should be simplified before the measures are fit for purpose.
  • Investment hubs will be severely disadvantaged under Pillar One and Pillar Two. This is an unacceptable outcome to fully compliant members of the OECD, and measures which damage the tax revenue of investment hubs must be reconsidered.
  • The tax sovereignty of nations is compromised under the Pillar Two proposal.

Please see the CCAB-I’s submission for further details.  The CCAB-I will participate in public discussions on Pillar One and Two on 14th /15th January.