OECD – PUBLIC CONSULTATION DOCUMENT. GLOBAL ANTI-BASE EROSION PROPOSAL (“GLOBE”) – PILLAR TWO. 8 November 2019 – 2 December 2019. Tax Challenges Arising from the Digitalisation of the Economy. Background In May 2019 the Inclusive Framework agreed a Programme of Work for Addressing the Tax Challenges of the Digitalisation of the Economy. The Programme of Work is divided into two pillars: Pillar One addresses the allocation of taxing rights between jurisdictions and considers various proposals for new profit allocation and nexus rules; Pillar Two (also referred to as the “Global Anti -Base Erosion” or “GloBE” proposal) calls for the development of a co-ordinated set of rules to address ongoing risks from structures that allow MNEs to shift profit to jurisdictions where they are subject to no or very low taxation. The Secretariat has prepared a proposed “Unified Approach” under Pillar One that is based on the significant commonalities between the various profit allocation and nexus proposals. The Secretariat released a public consultation document on this unified approach on 9 October 2019. This Consultation Document seeks comments on the Pillar Two proposals. While the consultation under Pillar One centres on the unified approach, this Consultation Document focusses on specific technical issues in respect of the GloBE proposal where input from stakeholders would be valuable in progressing the work. Public Consultation Document For purposes of this consultation, comments are welcome on all aspects of the Programme of Work on Pillar Two, but requested specifically on three technical design aspects of the GloBE proposal: a) the use of financial accounts as a starting point for determining the tax base under the GloBE proposal as well as different mechanisms to address timing differences; b) the extent to which an MNE can combine high-tax and low -tax income from different sources taking into account the relevant taxes on such income in determining the effective (blended) tax rate on such income; and c) stakeholders’ experience with, and views on, carve-outs and thresholds that may be considered as part of the GloBE proposal. The comments provided will assist members of the Inclusive Framework in the development of a solution for its final report to the G20 in 2020. Some of the technical and design aspects of the GloBE proposal depend on policy choices to be agreed within the context of the Inclusive Framework. For example, the mechanics and operation of the undertaxed payment rule and the nature and scope of the subject to tax rule need to be further developed by the Inclusive Framework for a clearer outline of these rules to emerge, which could then benefit from further public consultation at a future point in time. The proposals included in this consultation document have been prepared by the Secretariat, and do not represent the consensus views of the Inclusive Framework, the Committee on Fiscal Affairs (CFA) or their subsidiary bodies. Interested parties are invited to send their comments no later than Monday 2 December 2019, 18:00 (CET), by e-mail to taxpublicconsultation@oecd.org in Word format (in order to facilitate their distribution to government officials). All comments should be addressed to the International Co-operation and Tax Administration Division, Centre for Tax Policy and Administration. Please note that all comments on this public consultation document will be made publicly available. Comments submitted in the name of a collective “grouping” or “coalition”, or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective group, or the person(s) on whose behalf the commentator(s) are acting. Speakers and other participants at the upcoming public consultation meeting in Paris will be selected from among those providing timely written comments on this consultation document. Public Consultation Meeting The public consultation meeting on the developments under Pillar Two will be held on 9 December 2019, at the OECD Boulogne in Boulogne-Billancourt. The objective is to provide external stakeholders an opportunity to provide input on the ongoing work. Information on the public consultation meeting is available on the OECD Website.
