On October 12, 2020, the OECD’s (Organisation for Economic Co-operation and Development) Inclusive Framework on BEPS (base erosion and profit shifting) announced its plans for tackling digitalization related tax challenges going into middle of 2021 and likely beyond. The analysis below summarizes the work plan’s “two pillars”, next steps in the process and potential risk factors.
The stakes for multinational businesses are high. In particular, Pillar Two would create an elaborate new system of tax rules applicable to all multinationals with annual global sales revenue in excess of a stated threshold (€750 million in the current draft blueprint). These rules would aim to ensure that a certain minimum effective tax rate was paid on all of the group’s global income. . . . The business community has every reason to be concerned about the outcome of this process, and to do whatever is possible to try to influence the outcome.”
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