![]() The Interim Report sets out the Inclusive Framework jurisdictions’ agreed direction of work on digitalization and the international tax rules through 2020. In March 2018, the OECD released a document “Tax Challenges Arising from Digitalisation - Interim Report 2018” (the Interim Report) as a follow up to the Action 1 Final Report. However, the Action 1 Final Report does not recommend any of the options analyzed and leaves it up to individual countries to introduce any of them as additional safeguards against BEPS. In addition, the Action 1 Final Report considers broader direct and indirect tax challenges raised by the digital economy and evaluates options to address those challenges. The Action 1 Final Report states that special rules designed exclusively for the digital economy would prove unworkable, broadly stating that the digital economy cannot be ring-fenced because it “is increasingly becoming the economy itself,” and summarizes key features of evolving digital business models that the OECD considers relevant for the overall BEPS analysis. The Action 1 Final Report provides the OECD conclusions regarding the digital economy and recommended next steps to address the tax challenges presented by its evolution. In October 2015, the OECD released the Final Report on Action 1 (the Action 1 Final Report), Addressing the Tax Challenges of the Digital Economy, together with the final reports on the other 14 elements of the BEPS Action Plan. The Blueprint indicates that the follow up work on Pillar One will focus on resolving the remaining political and technical issues, which include essential elements of Pillar One, such as issues around scope, quantum, the choice between mandatory and safe harbor implementation, and aspects of the new tax certainty procedures connected to Pillar One. Interested parties are invited to submit written comments by 14 December 2020, and the OECD is planning to host virtual public consultation meetings in mid-January 2021. The Inclusive Framework welcomes comments on all aspects of the Blueprint, with specific questions of particular interest laid out in a public consultation document. ![]() With the release of the Blueprint, the OECD also announced plans for consultations with stakeholders. However, the cover statement of the Inclusive Framework refers to the Blueprint as a “solid basis for future agreement” and states that the member jurisdictions have agreed to keep working “to swiftly address the remaining issues with a view to bringing the process to a successful conclusion by mid-2021.” The aim of Pillar One is to reach a global agreement on changing the allocation of taxing rights on business profits in a way that expands the taxing rights of market jurisdictions.Īs the OECD documents make clear, the Blueprint does not reflect agreement by the member jurisdictions of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) because there are political and technical issues that still need to be resolved. These documents include the long-awaited report on the Pillar One Blueprint (the Blueprint). On 12 October 2020, the Organisation for Economic Co-operation and Development (OECD) released a series of major documents in connection with the ongoing G20/OECD project titled “Addressing the Tax Challenges of the Digitalisation of the Economy” (the BEPS 2.0 project).
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