HomePillar One: Taxing the Digital Economy - Executive Summary
Pillar One: Taxing the Digital Economy - Executive Summary
Proposal for a unified approach from 137 countries of the Inclusive Framework on BEPS on the taxation of the digital economy.
The purpose is to tackle the challenges of the digitalization of the economy.
Main measures include the reallocation of taxing rights, new profit allocation rules and a new nexus rule.
The Pillar One Proposal (“Proposal”) aims to unify the different responses in the context of the tax work of the OECD/G20 Inclusive Framework on BEPS, on the digitalisation of the economy.
The Proposal focuses on the reallocation of taxing rights, with the aim to undertake a coherent and concurrent review of profit allocation and nexus rules.
On January 31, 2020 the OECD published an update statement (the “Statement”) on the Digital Tax Initiative, highlighting progress on the scope of the new taxation rights and agreeing to a timeline to reach a consensus position by the end of the year.
The purpose of the Proposal is to tackle the tax challenges of the digitalisation of the economy by:
Reallocating taxing rights in favour of the countries and jurisdictions where highly digitalized businesses which are able to operate remotely and/or profitable, have their users/markets;
Restoring stability and certainty in the international tax system;
Simplifying the tax system and addressing possible overlaps with existing rules; and
Mitigating the risks of double taxation.
Automated digital services and consumer-facing businesses
Reallocation of taxing rights, new profit allocation rules and new nexus rule