The OECD recently published its latest proposals to address the tax challenges arising from digitalisation of the economy. This is part of the on-going work at OECD level to develop a consensus based global solution. The proposals, known as “Blueprints”, are open for public consultation until 14 December 2020. A public consultation meeting will take place in mid-January 2021. Under the auspices of the CCAB-I, the Institute will be responding to the consultation. Members who wish to contribute to the CCAB-I’s submission can email tax@charteredaccountants.ie. A consensus-based solution will not be reached by the end of 2020 as was originally planned. The OECD outlined that they plan to address the remaining issues with a view to bringing the process to a conclusion by mid-2021.

The two Blueprints cover Pillar One and Pillar Two. Pillar One looks at the attribution of revenues to market jurisdictions. Pillar Two deals with the imposition of a global minimum tax. The Blueprints indicate the degree of current consensus and outstanding issues.

Pillar One seeks to reform existing profit allocation and nexus rules to allocate more profits to market/user jurisdictions, in excess of those allocated under current transfer pricing rules, to reflect digital business models. The Inclusive Framework will now focus on resolving the remaining political and technical issues, including scope, quantum, safe harbour implementation, and tax certainty procedures in respect of Amount A.

Pillar Two seeks to implement a global minimum effective tax rate for multinational groups. The Inclusive Framework acknowledge that jurisdictions are free to determine their own tax systems, including whether they have a corporate income tax and the level of their tax rates, but also consider the right of other jurisdictions to apply an internationally agreed Pillar Two regime where income is taxed below an agreed minimum rate.

For more information on the project, you can find the below detail on the OECD website:

• Press statement released by the OECD
• Blueprint for Pillar One
• Blueprint for Pillar Two
• OECD Tax Talks Webinar
• Public Consultation Document