IFA 2022: IBFD director slams OECD model

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

IFA 2022: IBFD director slams OECD model

Awakening fast changing city, northern Vietnam, a developing cit

Belema Obuoforibo, director at non-profit IBFD, has criticised the policy design of the OECD’s two-pillar solution at an IFA panel.

The International Bureau of Fiscal Documentation’s director has slammed the design of the OECD’s global two-pillar project during a panel discussion at the IFA Congress in Berlin today, September 5, claiming that the starting point of the policy should be the interest of developing countries.

Obuoforibo said that despite the “promising” statements made by the Inclusive Framework (IF), some missing details in the progress report, published by the OECD in July, could jeopardise pillar one and two.

“The underlying policy concern is that in designing the global framework, the starting point is the interest of developing countries,” she explained. “Perhaps there is still some middle ground that policymakers should look into when looking at developing countries.”

For pillar one, developing countries are concerned around the scope; the size of expected tax revenue; withholding taxes; and the treatment of losses.

These countries call for a wider scope that catches more jurisdictions and greater revenue. They also support for the implementation of Article 12B of the UN Model Convention rather than Amount A of the OECD model, according to Obuoforibo.

Under Article 12B of the UN model, any business – regardless of size – would be subject to automated digital services tax (DSTs).

Many African countries consider the UN model to provide a simpler and easier policy for tax administrations and taxpayers, but policymakers argue this could lead to a rise of unilateral DSTs.

Amount A ‘battleground’

Obuoforibo also pointed out some key issues within July’s progress report on Amount A of pillar one.

Amount A is designed to address the risk of double counting, in which Amount A is applied despite a tax having been already administered, but countries are debating whether withholding taxes should be considered in the policy rule.

“That’s a big issue. Developing countries reject the idea of including withholding tax. Amount A is also a new taxing right that overlays a taxation system,” said Obuoforibo.

“When a lot of countries signed up to the IF, there was no indication at the time that withholding tax would be taken into account. For it to show up now, it’s causing issues – it calls for further enquiry,” she added.

The discussion around the inclusion of withholding taxes in Amount A will be a “very serious battleground”, according to Obuoforibo.

Pillar two and more

As for pillar two, developing nations also deem the agreed minimum rate of 15% to be too low for its implementation to be fully beneficial.

“Many developing countries have rates of between 20% and 25% already,” said Obuoforibo.

In the meantime, developing countries are also calling for an expansion and levelling of withholding taxes, as they find them easier to administer.

However, the extension of withholding tax should not become an alternative to transfer pricing (TP), according to Obuoforibo.

A robust TP system aligned with the arm’s-length principle and withholding taxes could be the ideal combination.

more across site & shared bottom lb ros

More from across our site

Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
A ‘paradigm shift’ in Chile’s tax enforcement requires compliance architecture built on proactive governance, strategic documentation and active monitoring of judicial developments
Gift this article