Noting that the rules for both pillars will be extremely complex, creating a substantial compliance burden for MNEs and a resource burden for already stretched tax authorities, the CIOT suggests that further work on Pillar One ‘should focus on the practicalities of any agreed solution and ensure that the rules are proportionate to the intended policy objectives’.
On tax certainty, the CIOT notes the lack of consensus on various critical issues including how certainty reviews will work, where the outcome of a review will need to be turned into legal certainty: ‘In particular, until the composition and processes of the Determination Panel are resolved, a key aspect of Pillar One remains unstable.’
On simplicity, the CIOT highlights the difficulties of identifying entities in market jurisdictions and those in relief jurisdictions, leading to uncertainty around compliance obligations for MNEs, and supports efforts to streamline compliance and administration processes for Amount A.
The CIOT also raises a number of points on double taxation relief, including the potential ‘single’ or ‘multiple’ taxpayer approaches to determining which entity is liable for Amount A tax.
One practical suggestion running through recent digitisation consultation responses is to provide ‘soft landings’ or temporary raised thresholds, to test the operation of the rules with a smaller number of MNEs or before the rules come into effect.
Noting that the rules for both pillars will be extremely complex, creating a substantial compliance burden for MNEs and a resource burden for already stretched tax authorities, the CIOT suggests that further work on Pillar One ‘should focus on the practicalities of any agreed solution and ensure that the rules are proportionate to the intended policy objectives’.
On tax certainty, the CIOT notes the lack of consensus on various critical issues including how certainty reviews will work, where the outcome of a review will need to be turned into legal certainty: ‘In particular, until the composition and processes of the Determination Panel are resolved, a key aspect of Pillar One remains unstable.’
On simplicity, the CIOT highlights the difficulties of identifying entities in market jurisdictions and those in relief jurisdictions, leading to uncertainty around compliance obligations for MNEs, and supports efforts to streamline compliance and administration processes for Amount A.
The CIOT also raises a number of points on double taxation relief, including the potential ‘single’ or ‘multiple’ taxpayer approaches to determining which entity is liable for Amount A tax.
One practical suggestion running through recent digitisation consultation responses is to provide ‘soft landings’ or temporary raised thresholds, to test the operation of the rules with a smaller number of MNEs or before the rules come into effect.
