The OECD has launched a public consultation on the first building block element of Pillar One of the Two-Pillar plan on the tax challenges of digitalisation. The consultation is on the draft rules for Nexus and Revenue Sourcing and is open until 18 February 2022.
Agreement was reached in October 2021 by over 135 members of the OECD/G20 Inclusive Framework on BEPS to a two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy. Broadly the revenue sourcing rules, under Pillar One, will allow in-scope MNEs to identify the market jurisdictions from which revenue is derived and to apply the revenue-based allocation key. Revenue is sourced to the end market jurisdictions where goods or services are used or consumed.
As part of the implementation work on the two-pillar plan there will be a number of public consultations in the coming weeks and months:
- For Amount B of Pillar One a public consultation document will be issued in mid-2022.
- For Pillar Two, an Implementation Framework is being developed to facilitate the co-ordinated implementation of the GloBE rules. A public consultation on the Implementation Framework will be launched later this month.
- For the Subject to Tax Rule (STTR) of Pillar Two, the draft model provision and its commentary will be released in March 2022 with a defined set of questions set for input.
- A public discussion draft on the development of a multilateral instrument to facilitate the implementation of the STTR would also be released for comment at the same time.
For more information visit the OECD website.
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