On 9 October 2019, the OECD announced the launch of a public consultation on a Secretariat Proposal for a "Unified Approach" under Pillar One of the programme of work to address tax challenges of the digitalisation of the economy. The OECD also held a webcast on 9 October, which mainly focused on Pillar One and the proposed Unified Approach. The Unified Approach is based on commonalities among three existing proposals and is designed to achieve or lead to a consensus solution that can be agreed to.
The following is a summary of the key features of the proposed Unified Approach as provided in the consultation document:
Note - The deemed residual profit used for Amount A would be the result of simplifying conventions agreed on a consensual basis. This means that it would only seek to approximate, without precisely quantifying, the amount of residual profit of an MNE group.
The deadline for comments on the Pillar One Unified Approach is 12 November 2019, with a public consultation meeting scheduled for 21 and 22 November 2019.
Further to Pillar One, Pillar Two of the work program was also briefly discussed during the webcast, which includes the GloBE proposal that seeks to ensure that all internationally operating businesses pay a minimum level of tax. This includes four interconnected rules, an income inclusion rule, a switch-over rule, an undertaxed payments rule, and a subject to tax rule. The rules are currently under discussion, with a consultation document for Pillar Two to be released in early November 2019 and a public consultation to be held in December 2019.
An Inclusive Framework meeting to discuss the proposals for both Pillars is to be held at the end of January 2020, with a follow-up meeting to be held in June 2020. The goal is to have a consensus-based long-term solution by the end of 2020.
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