The Organisation for Economic Co-operation and Development (OECD) held its annual tax conference in Washington, DC at the end of June. Discussions at the conference focused on developments with respect to the Base Erosion and Profit Shifting (BEPS) Pillars One and Two project.
OECD leadership acknowledged that the Multilateral Convention on Pillar One will not be ready for signature in July as was the target in the agreed timeline, however it was announced that a package with key building blocks of Pillar One will be released this month in the form of a consultation document for open comment. The document is expected to address various issues, including the Marketing and Distribution Profits Safe Harbor, elimination rules to prevent double taxation and interaction with withholding taxes.
The OECD and government officials made clear that the Model Rules and related Commentary that have been released on the Pillar Two global minimum tax provide countries with what they need to begin to implement these rules into their domestic tax laws.
U.S. Treasury officials at the conference also offered the U.S. Government’s position on a number of BEPS issues. A Treasury official reiterated the opinion that modification of the global intangible low-taxed income regime (GILTI) to include a country-by-country approach with a 15% rate would make the regime a Pillar Two qualifying income inclusion rule.
While OECD leadership painted a rosy picture of recent progress, it remains clear that numerous implementation delays (as previously noted in this blog) will push any global agreement back to 2024 at the earliest and raise serious questions as to whether any global accord will ever come to fruition at all.
The McGuire Sponsel Global Business Services team will continue to monitor these developments. If you have any questions about our team or any global business issue, do not hesitate to reach out.
Jason Rauhe, CPA is a Principal in the firm’s Global Business Services practice and is responsible for assisting clients and adding depth in all areas of the firm’s international tax consulting services including transfer pricing, and the firm’s compliance expertise.
Rauhe previously served as Director of International Tax at a Top 100 CPA Firm, where he was responsible for the firm’s international tax division and major industry alliance networks.