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Global tax reform

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  • OECD/G20 BEPS 2.0
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  • OECD/G20 BEPS 2.0

OECD/G20 BEPS 2.0

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.

Tax International
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Publication of OECD’s Pillar Two model rules

The OECD’s model rules for a 15 percent global minimum effective tax rate have just published. The model will form the basis for national rules and an EU directive.  The rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules under Pillar Two, which will introduce a global minimum corporate tax rate set at 15 percent. The minimum tax will apply to MNEs with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually. In early 2022, the OECD will release the Commentary relating to the model rules and address co-existence with the US Global Intangible Low-Taxed Income (GILTI) rules. This will be followed by the development of an implementation framework focused on administrative, compliance and co-ordination issues relating to Pillar Two. The Inclusive Framework is also developing the model provision for a Subject to Tax Rule, together with a multilateral instrument for its implementation, to be released in the early part of 2022. A public consultation event on the implementation framework will be held in February and on the Subject to Tax Rule in March. For full details of today’s publication see the OECD’s website.

Dec 20, 2021
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Tax International
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Tax administrations to prioritise BEPS 2.0, digital transformation & capacity building

The OECD's Forum on Tax Administration (FTA) met on 16-17 December to discuss the implementation of the Two-Pillar solution under BEPS 2.0, ongoing responses to the global COVID-19 pandemic, digital transformation and capacity building.  FTA members agreed to prioritise support for implementation of the Two-Pillar Solution, including the possible further development of tax certainty tools to help prevent disputes and reduce burdens.  The FTA also discussed developing a new strategic framework covering both digitalisation and digital transformation to inform both domestic reforms and international collaboration.  The FTA also plan to prioritise tax capacity building initiatives to assist developing countries with the implementation of the Pillars and the further digitalisation of tax administration. The FTA also released two reports: a new Digital Transformation Maturity Model covering the key building blocks of future tax administration; and, together with the African Tax Administration Forum (ATAF), a report on Supporting the Digitalisation of Developing Country Tax Administrations. For more details, including on the reports published since the 2020 Amsterdam Virtual Plenary meeting, and the FTA's future work programme, see the communiqué released at the close of the meeting.

Dec 20, 2021
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Public consultation on OECD tax proposals – we need your insights

The Department of Finance launched a public consultation on the OECD’s international tax proposals. Chartered Accountants Ireland under the auspices of the CCAB-I will respond to the consultation. We will reflect the unique professional experience of accountants on the issues raised in this important consultation.  With that in mind we invite members to respond to this survey before 16 August.  The Department of Finance notes that the consultation will be helpful in identifying the challenges and opportunities of the proposals in respect of Ireland’s corporate tax code and broader industrial policy.   On launching the consultation, Minister Donohoe said: ‘I believe it is in the interest of all concerned to achieve an equitable, ambitious and sustainable agreement at the OECD on the international tax architecture. It is essential as we emerge from the Covid-19 pandemic that the international tax system provides the necessary certainty and stability to support growth and investment, and Ireland is committed to playing our part in reaching the comprehensive agreement’. “I am committed to ensuring that Ireland’s tax policy continues to support economic growth and prosperity, and in this respect I would welcome the views of the public and key stakeholders on the key aspects of the OECD proposals” The consultation period runs from 20 July to 10 September.  For more details see the Department of Finance’s website. 

Jul 26, 2021
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