Coronavirus Won't Delay Digital Tax Work, OECD Says
Ulrika Lomas, Tax-News.com, Brussels
30 March, 2020
The OECD has said that it is continuing to forge ahead with the development of new international tax rules for the digitalized economy.
The OECD said that although it has made changes to working arrangements, COVID-19 will not stymie progress towards delivering a solution to the tax challenges of the digitalized economy by the end of this year.
In a March 17, 2020, statement, the OECD said: "Due to the developing coronavirus (Covid-19) emergency, the OECD has implemented a range of precautionary measures at its Paris headquarters. These measures are consistent with announcements by the Government of France, the OECD's host country, on steps being taken to contain the epidemic, and include full teleworking for staff and suspension of all physical meetings on-site."
"The OECD Secretariat team is working full steam on the project and meetings with delegates are being held remotely. The Steering Group, the Task Force on the Digital Economy and other Working Parties will continue holding virtual meetings in the coming weeks, on schedule. The working methods will be adapted to allow all countries to fully participate."
"All participants continue working towards reaching a political decision on the key components of a multilateral consensus-based solution at the G20/OECD Inclusive Framework on BEPS plenary meeting scheduled for July 1-2, 2020, in Berlin, Germany."
The digital tax work involves two workstreams:
As part of "Pillar One", states will negotiate new rules on where tax should be paid ("nexus" rules) and on what portion of profits that should be taxed ("profit allocation" rules). This work seeks to ensure that multinational enterprises conducting sustained and significant business in places where they may not have a physical presence can be taxed in such jurisdictions.
Pillar Two (also referred to as the "Global Anti-Base Erosion" or "GloBE" proposal) calls for the development of a coordinated set of rules, including on a minimum effective tax burden for multinationals, to address ongoing risks from structures that allow MNEs to shift profit to jurisdictions where they are subject to no or very low taxation.