The Inclusive Framework of 139 countries is working under the umbrella of the OECD and G20 to reach consensus on new global tax rules to determine where multinationals are taxed and how much tax they pay in response to the digitalisation of the world economy. The work of the Inclusive Framework is known as BEPS 2.0.
The Inclusive Frame published their blueprint proposals in October 2020 known as Pillar One and Pillar Two.
Pillar One proposes that multinationals pay tax on sales made through digital channels in the markets they are selling into.
Pillar Two proposes a global minimum tax to address base erosion and profit shifting practices not captured in the BEPS 1 initiative of 2015 which sought to put a stop to aggressive tax planning by multinationals.
Pillar One and Pillar Two were subject to a public consultation which Chartered Accountants Ireland responded to under the auspices of the CCAB-I.
The OECD aims to deliver its finalised proposals for Pillar 1 and Pillar 2 to the G20 in July this year. The OECD’s proposals will present challenges for Ireland as changes to the international tax framework would see a reduction in the level of profits taxable in Ireland with an estimated reduction in corporation tax revenue of between €2 billion and €3.5 billon. However failure to reach agreement at the OECD would also have negative consequences for the Exchequer as unilateral measures by countries around the world will give rise to trade tensions and increased taxation.
Dr Brian Keegan Director of Advocacy and Voice, Chartered Accountants Ireland joined Paul Tang, MEP, Chair of the new European Parliament subcommittee on Tax Matters and Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration to debate the “Future of Corporation Taxation in Europe over the next 10 years.” The event was hosted by the Institute of International and European Affairs.
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