138 tax jurisdictions have agreed on a global reform regarding the international tax system. The "Outcome Statement," agreed upon at the 15th Inclusive Framework Meeting, involves 20 months of intensive technical negotiations by delegates to continue to implement a two-pillar solution to address the tax challenges arising from the digitalization of the economy.
The recently agreed Outcome Statement will be provided to the Finance Ministers and Central Bank Governors at their meeting in India next week.
Current Context
These jurisdictions are members of the OECD's Base Erosion and Profit Shifting (BEPS) Inclusive Framework, as well as G20, and account for over 90% of global GDP. It reflects the collaboration and engagement between all jurisdictions, either small or large, during the negotiations of the Inclusive Framework since October 2021.
Pillar One Approach
The Inclusive Framework plans to approve a final report on Amount B of Pillar One, which aims to simplify the administration of the Transfer Pricing rules for tax administrations and incorporate key content into the OECD Transfer Pricing Guidelines by January 2024.
In that regard, the Multilateral Agreement to implement Pillar 1 could occur in the second half of 2023, at a ceremony organized by the end of the year, and should enter into force throughout 2025, allowing for internal consultation and legislative and administrative processes applicable in each jurisdiction.
Further work on Amount B of Pillar One, launched next week with a public consultation until September 1, is scheduled to be completed by the end of the year.
Two Pillar Solution
It will provide stability to the international tax system, making it fairer and working better in an increasingly digitalized and globalized world economy. Eventually, it will ensure a fairer distribution of profits and tax rights between countries and jurisdictions regarding the largest multinational companies in the world.
The OECD will also prepare a comprehensive action plan to support the fast and coordinated implementation, with additional support and technical assistance to enhance the implementation capacity of developing countries.
Source: Transferpricingnews.com
