The OECD reported on 31 May 2019 that a program of work has been agreed for work to reach agreement on the tax challenges arising from the digitalisation of the economy. A document has been issued outlining a plan for continuing discussion around the two main pillars set out in the policy note of January 2019. Based on these discussions the OECD aims to find a long-term solution for taxing multinational enterprises by the end of 2020.
The document is to be presented to the meeting of G20 Finance Ministers taking place on 8 and 9 June 2019.
In the first pillar the countries of the OECD’s Inclusive Framework are looking at the question of where tax is due (the nexus); the basis on which tax is due; and how much of the profit should be taxed in the jurisdiction where the users are located.
In the second pillar the Inclusive Framework is looking at establishing a minimum level of tax that would be due from multinationals in the digital economy and other areas. This would help countries to protect their tax base from attempts by multinational groups to shift profits to low tax jurisdictions.
Together with the technical work on the issue there will also be an impact assessment to show the likely effect of any proposed solution on tax revenue and investment.
