Davos panel exposes disagreements on two-pillar tax reform

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

Davos panel exposes disagreements on two-pillar tax reform

Tax panel, Davos, Jan 2023.PNG
Speakers on the 'Is Global Tax Reform Stalling?' panel

The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.

Speakers on the only panel dedicated to tax at last week’s World Economic Forum described the global agreement on international tax reform, commonly known as BEPS 2.0, as a step in the right direction but didn’t hold back in their criticism of the deal.

The panel, comprising government ministers and other officials, was hosted live in Davos, Switzerland, on Thursday, January 19.

Mathias Cormann, secretary general of the OECD, which facilitated the negotiations, was forced to defend aspects of the package from charges that its scope was too narrow and that it did not go far enough on a global minimum corporate tax rate.

Cormann said he hoped the jurisdictions that had signed up to the agreement, which now number 138, would conclude the drafting of the multilateral convention required to implement the package’s pillar one by the middle of this year so that it could be put into place on schedule around the world in 2024.

“There are still various areas where there are technical discussions and public consultations,” he said.

“For example, on issues like how we treat withholding taxes. Those who pay taxes in market jurisdictions say withholding taxes are taxes they have paid and they should be taken into account. Others say withholding taxes are not in scope and if they are part of the equation, we should adjust amount A. It becomes very technical very quickly.”

Amount A refers to the formula-based share of residual profit allocated to market jurisdictions.

Zainab Shamsuna Ahmed, Nigeria’s minister of finance, budget and national planning, said her country could not sign up to the agreement in its current form but would be interested in joining if improvements were possible.

“Most of the digital enterprises in our countries are the medium-sized ones. They’re not the very, very large ones,” Ahmed said.

“The outcome of this means there will be discriminatory taxes within our jurisdiction, so, if we sign up, we will not be able to tax these small and medium-sized businesses while we are taxing similar Nigerian companies operating in the same market.”

Gabriel Zucman, director of the EU Tax Observatory, said he was a critic of the agreement because the minimum corporate tax rate of 15% imposed by pillar two was too low.

“This agreement is the first time where countries are going to agree on a minimum tax rate,” he said. “It’s going to make a real difference, especially pillar two, because many companies pay less than 15%, at least in some of the countries in which they book profits.

“That being said, it is also very insufficient and it’s also conceptually and philosophically flawed. It isn’t sufficient because a tax rate of 15% is way too low,” he added.

Faisal Alibrahim, the minister of economy and planning in Saudi Arabia, said his country broadly supported the deal: “There are some details that need to be sorted out, but it is underpinned by the pillars of fairness. It’s all about making sure that value and taxation are close to each other.”

The WEF finished on Friday, January 20.

 


more across site & shared bottom lb ros

More from across our site

AI-powered tax agents are likely to be the next big development in tax technology, says Russell Gammon of Tax Systems
FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
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
Gift this article