As part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS and its Task Force on the Digital Economy, the OECD held a public consultation in Paris on 13 and 14 March on possible solutions to the tax challenges arising from the digitalisation of the economy.
The current OECD proposals, as outlined in the consultation document issued on 13 February 2019, has two main pillars.
a high level proposal for a digitalised permanent establishment. (This proposal was, by all accounts, a last minute addition, which might restrict its status as an equal contender at this stage.)
Whilst a range of views was expressed, some high level conclusions are possible:
Ultimately, there was an acceptance in Paris that pragmatism would be required to reach a broad political consensus and develop any solution capable of implementation. The suggestion that ‘a theory is not a theory unless it works in practice’ received strong support.
Given that there will inevitably be winners and losers on any alteration of taxing rights and profit allocation, a practical impact assessment seems necessary as a matter of urgency as a pre-step to any political agreement. The OECD was clear that it would be grateful for information to feed into this from any businesses willing to share the impacts of the different proposals on their particular tax position.
The OECD will reflect on the responses it has received to its consultation. A timetable of meetings is scheduled for the ensuing months, which will culminate in the G20 meeting in May. The OECD aims to present an agreed solution by 2020.
The tenor and direction of the international debate should alert UK policymakers to a need to reconsider their current path. The UK’s proposals seem increasingly out of kilter with the deliberations of international academic, businesses and policymakers, who (with a few notable exceptions) appear to be moving away from a pure ‘user participation’ tax.
Ceri Stoner, partner, Wiggin (ceri.stoner@wiggin.co.uk)
As part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS and its Task Force on the Digital Economy, the OECD held a public consultation in Paris on 13 and 14 March on possible solutions to the tax challenges arising from the digitalisation of the economy.
The current OECD proposals, as outlined in the consultation document issued on 13 February 2019, has two main pillars.
a high level proposal for a digitalised permanent establishment. (This proposal was, by all accounts, a last minute addition, which might restrict its status as an equal contender at this stage.)
Whilst a range of views was expressed, some high level conclusions are possible:
Ultimately, there was an acceptance in Paris that pragmatism would be required to reach a broad political consensus and develop any solution capable of implementation. The suggestion that ‘a theory is not a theory unless it works in practice’ received strong support.
Given that there will inevitably be winners and losers on any alteration of taxing rights and profit allocation, a practical impact assessment seems necessary as a matter of urgency as a pre-step to any political agreement. The OECD was clear that it would be grateful for information to feed into this from any businesses willing to share the impacts of the different proposals on their particular tax position.
The OECD will reflect on the responses it has received to its consultation. A timetable of meetings is scheduled for the ensuing months, which will culminate in the G20 meeting in May. The OECD aims to present an agreed solution by 2020.
The tenor and direction of the international debate should alert UK policymakers to a need to reconsider their current path. The UK’s proposals seem increasingly out of kilter with the deliberations of international academic, businesses and policymakers, who (with a few notable exceptions) appear to be moving away from a pure ‘user participation’ tax.
Ceri Stoner, partner, Wiggin (ceri.stoner@wiggin.co.uk)