Originally published: October 2023 OECD’s multilateral convention (MLC) on Amount A of Pillar 1 (P1) is the result of a delicate negotiation, resulting in a complicated web of provisions and a rough path to implementation. It can only enter into force if countries with sufficient ‘points’ ratify it and if you look down the list,… Continue reading

Originally published: October 2023 Two days ago, the OECD published the draft text for the multilateral convention (MLC) on Amount A of Pillar 1 (P1) and related documents (>1,000 pages of materials to work through: https://lnkd.in/eVxs-ETe MLC text here: https://lnkd.in/e8Ckfur5). Though it’s a lot to digest, it’s clear disagreements remain. Brazil, Colombia and India (BCI) objected to key… Continue reading

Originally published: September 2023 Should national parliaments be in the driving seat on international tax? In his Klaus Vogel lecture earlier this year, Bertil Wiman answered ‘yes’ (https://lnkd.in/eREQmzna). In his view, the success of the parliamentary consultation on EU directives should be used here too. A strong role of national politicians is preferred from a democratic perspective,… Continue reading

Originally published: September 2023 OECD’s Pillar 2 (P2) model rules and guidance will need regular tweaks and updates to respond to planning, problem cases and other developments. This also applies to Pillar 1 and Amount B (if they were to happen). This means OECD level negotiations will become a permanent state, though maybe at lower… Continue reading

Originally published: February 2023 There is a clear direction in the EU legislative proposals: – In Dec 2022, the EU approved the Pillar 2 (P2) Directive, resulting in a minimum taxation with a common tax base within the EU.– Approval of the Unshell Directive is scheduled for 2023Q2, which would limit double tax treaty (DTT) and… Continue reading

Originally published: November 2022 Alex Parker has been writing weekly views on global tax developments from a US angle. (Registration is required, but as of this week, registration is free.) Take this update from last month about Pillar 1. It’s understandable if you’ve tuned out of Pillar 1 developments as too complicated, too much of a… Continue reading

Originally published: November 2022 The pace of international tax debates has sped up a lot in the last few years. Between October 2021 to August 2022, there was an OECD Pillar 2 shocker almost every week. Now, things are settling down a bit. The small group of countries that are committed to implement unilaterally will… Continue reading

Originally published: October 2022 Why does the OECD need 227 pages to discuss the administrative side of Pillar 1? Because it’s a totally new tax system on top of the existing tax system. More than anything that came before, Pillar 1 seeks to establish a global separate tax with its own (directly applicable) rules and… Continue reading

Originally published: October 2022 This study from South Centre examines the expected impact of Pillar 1 and 2 on different countries, focusing on developing countries. Like every impact study, they had to work with simplifying assumptions. But I feel these simplifications went a bit too far to be all that useful. For Pillar 1, the… Continue reading

Originally published: September 2022 A split field on what method to use to avoid double taxation in Pillar 1. Longstanding practice has been to leave the choice between credit and exemption method up to the relief giving country (or rather the negotiating countries). There are reasons to see Pillar 1 as different, but these reasons… Continue reading

Originally published: September 2022 If you create a new taxing right for digital profits for source countries, it makes sense in my mind that you reduce it by what’s already payable in such country. The OECD Pillar 1 solution is a response to tech and other companies making significant sales without much taxable presence. But… Continue reading

Originally published: September 2022 The latest Pillar 1 developments just confuse me. Belema Obuoforibo came out strongly against a credit for WHT against the Amount A (https://lnkd.in/g38R8cZz). But in the OECD Progress Report, the latest public data on Pillar 1 (https://lnkd.in/eHpfMWAC), there is no mention of a possibility of any credit. So, what are we talking about… Continue reading

Originally published: August 2022 Two charts that explain where we are at with OECD Pillar 1 and 2 and where we are heading. Do they tell the whole and right story? Any countries that are misplaced on the graph? Any key countries missing and where should they be placed? Let me know if the comments.… Continue reading

Originally published: July 2022 The question ‘what to do’ was for someone supporting the OECD global tax deal, or at least supporting the underlying policy goals. It seems clear to me that those goals are best achieved through global cooperation, so ‘abort’ is not the best option. I think that ‘something new’ or a ‘redesign’… Continue reading

Originally published: July 2022 With the OECD tax deal in trouble, many people think it’s time to redesign both pillars into something simpler, more coherent, yet equally (or more) effective (eg see https://lnkd.in/eFjG55XS). Here’s a first attempt of by Heydon Wardell-Burrus. There’s good ideas here, but – as always – it remains to be seen if this… Continue reading

Originally published: July 2022 For once, I am part of a solid majority in one of my polls. It seems to me that Pillar 1 could have piggybacked a lot more on transfer pricing work that MNEs would have already done anyway. Amount A? Just use residual profits instead. Amount B? All routine profits. Maybe… Continue reading

Originally published: July 2022 Pillar 1 is ineffective for the main problem it is trying to solve. It’s been more than 10 years since the initial media storm about tax planning structures by US tech companies. It’s the reason we got BEPS, DSTs and now Pillar 1 (P1) and 2 (P2). Imagine two fictional large… Continue reading

Originally published: July 2022 My read of the OECD Progress Report on Amount A for Pillar 1 (https://lnkd.in/eHpfMWAC) is that it is not all that bad as it has been made out to be. Sure, it is incredibly complex and there are a lot of implications that are impossible to oversee right now, but that… Continue reading

Originally published: July 2022 I still have to go through the most recent Pillar 1 materials, but the commentator consensus seems to be that it’s over. Pillar 1’s chances were maybe never that great, but now it’s falling apart through death by a million cuts. So what changed?– For the past few months, both the… Continue reading

Originally published: July 2022 So Pillar 1 will be finalised by mid 2023 with the aim for countries to ratify in the course of 2024 (which might just become 2025, see below). The last weeks, everyone and their grandmother have speculated what would happen in the US given that (1) the Democrats are unlikely to… Continue reading

Originally published: July 2022 More signs that the EU is quietly opening the door to a unilateral implementation of Pillar 1, through a newly introduced art 55a in the Pillar 2 directive. It’s an option few people realised was even possible a few weeks ago. Indeed, some US critics have approached the chances of Pillar… Continue reading

Originally published: July 2022 First of its kind article that examines the benefits of the EU just implementing Pillar 1, even if the US doesn’t and overriding US tax treaties if they need to. It’s a solution no one has really been talking about, but now that the genie is out of the bottle, it… Continue reading

Originally published: June 2022 There was a very extensive discussion by senior OECD officials and key country representatives (including US and Germany) on Pillar 1, Pillar 2 and a variety of other topics at the annual OECD Conference. A few observations, but there’s lots more in the attached. Particularly on Pillar 1, this gives a… Continue reading

Originally published: June 2022 European Commissioner Gentiloni made some comments about the OECD deal to European Parliament FISC Subcommittee on Monday. Despite Hungary’s veto, he is still hopeful to get an EU agreement on Pillar 2 soon, so much so that he refuses to discuss a plan B because it could jeopardise his plan A.… Continue reading

Originally published: June 2022 Poland’s and Hungary’s dramatic vetoes changed the thinking on Pillar 1 and 2 from ‘will definitely happen’ to ‘question mark’. Pillar 1 looks in particular trouble due to delays and no clear idea how this will be implemented with Democrats sets to lose their Congressional majorities in the US. Yet the… Continue reading

Originally published: June 2022 In a way, last week’s EU ECOFIN global minimum tax (Pillar 2) showdown was really about tax on big tech (Pillar 1). Hungary and Poland questioned whether Pillar 1 is deliverable, given the unlikeliness of US implementation. The EC indicated they have an EU wide Digital Services Tax (DST) as back… Continue reading

Originally published: June 2022 So what will happen with Pillar 1 and Pillar 2 now? I think all four outcomes are possible, but I think the most likely outcome is that only the EU, the UK and a few other countries will end up implementing. Implementation in the US was always difficult and Hungary’s veto… Continue reading

Originally published: June 2022 What would happen if Hungary and/or Poland veto the global minimum tax directive on Friday? Could the rest of the EU move ahead without them under ‘enhanced cooperation’ (Enh Coop)? Poland only wanted to agree to a global minimum tax directive if there were guarantees that Pillar 1 (source country taxation… Continue reading