The OECD Secretary-General’s Tax report to G20 finance ministers sets out a revised and ‘more realistic’ timetable for pillar one, with a signing ceremony envisaged in the first half of 2023 for a multilateral convention to implement amount A, with entry into force in 2024.
The report also includes a ‘comprehensive draft’ of the model rules for implementation of pillar one.
OECD Secretary General Mathias Cormann said: ‘We have made good progress towards implementation of a new taxing right under pillar one of our international tax agreement. These are complex and very technical negotiations in relation to some new concepts that fundamentally reform international tax arrangements, to make them fairer and work better in an increasingly digitalised, globalised world economy.’
An implementation framework is expected to be released for pillar two, which introduces a 15% global minimum corporate tax rate, later in 2022.
The report also gives a tax transparency progress update, with recent OECD data showing that information on at least 111m financial accounts was exchanged automatically between tax administrations globally in 2021.
Professor Rita de la Feria, chair of tax law at the University of Leeds, commented on what she saw as ‘the slow death of pillar one’, saying that ‘even if [pillar one] was approved, it wouldn’t resolve key underlying problems’. Pillar one has become more unlikely in the past year, partly because of US politics but also because ‘pillar two is more complex to implement than thought [so] how bad would pillar one be?’ and also because ‘new taxes create path dependency [and] digital service taxes [DSTs] are no exception’.
She thought it unlikely that we would see new corporate tax initiatives for a while as ‘too much political and human capital had already been spent’. Instead, as things stand, we can expect ‘pillar two (in some shape or form)’ and digital service taxes are ‘here to stay’.
The OECD Secretary-General’s Tax report to G20 finance ministers sets out a revised and ‘more realistic’ timetable for pillar one, with a signing ceremony envisaged in the first half of 2023 for a multilateral convention to implement amount A, with entry into force in 2024.
The report also includes a ‘comprehensive draft’ of the model rules for implementation of pillar one.
OECD Secretary General Mathias Cormann said: ‘We have made good progress towards implementation of a new taxing right under pillar one of our international tax agreement. These are complex and very technical negotiations in relation to some new concepts that fundamentally reform international tax arrangements, to make them fairer and work better in an increasingly digitalised, globalised world economy.’
An implementation framework is expected to be released for pillar two, which introduces a 15% global minimum corporate tax rate, later in 2022.
The report also gives a tax transparency progress update, with recent OECD data showing that information on at least 111m financial accounts was exchanged automatically between tax administrations globally in 2021.
Professor Rita de la Feria, chair of tax law at the University of Leeds, commented on what she saw as ‘the slow death of pillar one’, saying that ‘even if [pillar one] was approved, it wouldn’t resolve key underlying problems’. Pillar one has become more unlikely in the past year, partly because of US politics but also because ‘pillar two is more complex to implement than thought [so] how bad would pillar one be?’ and also because ‘new taxes create path dependency [and] digital service taxes [DSTs] are no exception’.
She thought it unlikely that we would see new corporate tax initiatives for a while as ‘too much political and human capital had already been spent’. Instead, as things stand, we can expect ‘pillar two (in some shape or form)’ and digital service taxes are ‘here to stay’.
