A public consultation meeting was held by the OECD on 14 and 15 January 2021 to discuss the proposals in relation to Pillar One and Pillar Two of the tax challenges of the digital economy. Following the publication of Blueprints on Pillar One and Pillar Two on 12 October 2020 the OECD invited comments from interested parties, and the comments received were published earlier in January 2021. The topics for the public consultation meeting were based on the Blueprints and the comments received.

The discussions on the first day of the meeting looked at ways to reduce complexity in aspects of Pillar One, taking into account the feedback received on some aspects of the framework. Pillar One would grant countries a new taxing right that is no longer exclusively linked to the physical presence of the taxpayer in a jurisdiction, identifying market jurisdictions eligible to receive Amount A, with detailed sourcing rules. Simplification could cover the mechanism to eliminate double taxation, including the identification of the paying entities and the possibility of a marketing and distribution profit safe harbour.

The discussions on the first day also focused on the procedural elements relating to Amount A of Pillar One, such as prevention and resolution of disputes. The discussions also looked at Amount B (the fixed return for baseline marketing and distribution operations) and simplified administration of transfer pricing rules applicable to marketing and distribution activities.

On the second day there were discussions around the technical aspects of computing the Effective Tax Rate (ETR) in the light of the comments received during the consultation period. Some options for simplification of rules relating to tax base determination and the mechanisms to address timing differences were put forward in the Blueprints issued by the OECD on 12 October 2020.

The discussions on the second day also looked at a selection of other issues arising from the comments received on the consultation document. These issues included details of the income inclusion rule; the subject to tax rule and the undertaxed payments rule and how to coordinate them effectively. Improved implementation and administration of the rules was also discussed.