The digital transformation of the economy calls into question whether the international tax rules, which have largely been in place for most of the past 100 years, remain fit for purpose in the modern global economy. While good progress has been made in tackling base erosion and profit shifting (BEPS) through the BEPS Project, some of the more fundamental tax challenges posed by digitalisation have remained unaddressed. Through the BEPS Project and more recently, through the Inclusive Framework on BEPS, discussions on how to address the tax challenges that arise from digitalisation have been ongoing. Recent international efforts to address these issues have highlighted the divergent positions of many jurisdictions. While the introduction of unilateral measures in a number of countries has underscored the urgency of the issue and the need to re-assess some of the key international tax principles, these divergent positions have made a consensusbased solution difficult to achieve. In a significant advance, the 128 members of the Inclusive Framework have recently agreed a policy note – “Addressing the Tax Challenges Arising from Digitalisation” (OECD, 2019a) – that identifies concrete proposals in two pillars to explore and which could form the basis of a global, consensus-based solution. These pillars involve the re-allocation of taxing rights among jurisdictions and the need to address remaining BEPS issues. This policy note will be the basis for detailed analysis over the next 18 months as the Inclusive Framework works towards delivering a solution to the G20 by the end of 2020. In November 2015, two years after the G20 Leaders endorsed the ambitious Action Plan on BEPS, the BEPS package of 15 Actions to tackle tax avoidance was agreed by all OECD and G20 countries and endorsed by G20 Leaders. It was designed to stop countries and companies from competing on the basis of a lack of transparency, artificially locating profit where there is little or no economic activity, or the exploitation of loopholes or differences in countries’ tax systems. The work on tax and digitalisation has been a key aspect of the BEPS Project since its inception. Published as part of the BEPS package in October 2015, the Action 1 Report found that, as a result of the pervasive nature of digitalisation, it would be difficult, if not impossible, to ring-fence the “digital economy” from the rest of the economy for tax purposes. In other words, countries agreed that there was no such thing as a “digital economy”, but rather that the economy itself had become digitalised and that this trend was likely to continue. Following a mandate by G20 Finance Ministers in March 2017, the Inclusive Framework, working through its Task Force on the Digital Economy (TFDE) published Tax Challenges Arising from Digitalisation – Interim Report 2018: Inclusive Framework on BEPS (the Interim Report). The Interim Report provided an in-depth analysis of value creation across new and changing business models in the context of digitalisation and the tax challenges they presented. These challenges included risks remaining after BEPS for highly mobile income -producing factors which still can be shifted into low-tax environments. While members of the Inclusive Framework did not converge on the conclusions to be drawn from this analysis, they committed to continue working together towards a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019. Conscious of the significance and urgency of the issue, the TFDE has intensified its work since the delivery of the Interim Report. Drawing on the analysis included in the Action 1 Report as well as the Interim Report, and informed by recent discussions of the TFDE on a “without prejudice” basis, a number of concrete proposals have been outlined in “Addressing the Tax Challenges Arising from Digitalisation” (OECD, 2019a). The Inclusive Framework will continue to explore these proposals, including through a public consultation process, with the aim of developing a detailed work programme to guide the Inclusive Framework’s efforts to agree a global, long-term solution by the end of 2020.