![]() ![]() Pillar 2 would apply where income is not subject to a minimum effective tax rate in each country in which a business operates of at least 15%. Pillar 1 would still entail the reallocation of a share of the global residual profit of certain businesses to market countries, but this would only apply to very large global businesses. ![]() On 5 June 2021, the G7 finance ministers discussed the Pillar 1 and Pillar 2 proposals and reached an agreement on key elements of the global tax reform. The revenues in scope generally include those from online advertising, the sale of customer data, and subscriptions or other fees from online marketplaces and other intermediation platforms. These digital services taxes (DSTs) generally apply to gross revenue that is derived from “users” in those countries. In the absence of an international agreement on the taxation of the digitalised economy, some countries have either proposed or introduced an interim unilateral tax on certain digital services. ![]() This work is intended to address remaining issues identified by the OECD/G20 BEPS initiative by providing countries with new tools to prevent their tax base from being shifted to jurisdictions that tax profits at less than the minimum rate. Pillar 2: Global anti-base erosion mechanism: This pillar involves work on a system that would ensure that multinational enterprises pay a minimum level of tax, regardless of whether they have highly digitalised businesses.Pillar 1: Reallocation of profit and revised nexus rules: This pillar involves work on potential solutions for determining where tax should be paid and on what basis, as well as the proportion of profits that should be taxed in the jurisdiction of the customer or user.There are two pillars included in the current work program: This has led to further reports from the OECD and to a renewed commitment by the OECD and G20 to try to reach a consensus solution. Work on this area was reinvigorated in 2017 when the OECD released a request for input regarding the tax challenges raised by digitalisation and for potential options to address these challenges, as part of the ongoing work of the Task Force on the Digital Economy (TFDE). Therefore, it was agreed that this area should continue to be monitored. The Action 1 final report includes few specific recommendations, as the potential solutions identified could involve changes to the tax framework that go beyond those required by BEPS. Telecommunications, Media & EntertainmentĪction 1 addresses the tax challenges of the digitalisation of the economy, and specifically aims to identify and address the main challenges that the digitalisation of the economy poses for the existing international tax rules.Ī final report on Action 1 was issued in October 2015 alongside the final reports on other BEPS actions. Infrastructure, Transport & Regional Government ![]()
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