ICC Comments on OECD public consultation document: Reports on the Pillar One and Pillar Two Blueprints: Tax challenges arising from digitalisation
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ICC welcomed the opportunity to provide input on the Organisation for Economic Co-operation and Development (OECD)’s public consultation document on the Reports on the Pillar One and Pillar Two Blueprints, as part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework) to address the tax challenges arising from digitalisation. ICC recognises the efforts by the OECD to enable countries, within the context of the Inclusive Framework, to work collaboratively towards the development of a consensus-based solution by mid-2021.
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The ICC commends the leadership of the OECD and the Inclusive Framework participating countries for their work to address these complex international tax challenges. ICC fully supports a harmonised approach to ensure that international tax rules remain relevant and consistently applicable in an increasingly digitalised global economy.
ICC provided high level comments on global cooperation to address remaining issues; risk for double taxation & need for effective dispute resolution; and elimination of unilateral measures.
ICC recognises that there are technical and complex questions regarding taxing rights and profit allocation and underlines the need for a global, collaborative effort to address the tax challenges of digitalisation, through mutual consensus, and reiterates that any solutions should be designed to be sustainable over the long-term and have broad adoption by countries to allow for seamless application for business.
As fundamental changes to the international tax framework are being considered, ICC stresses the importance of having required robust dispute avoidance and mandatory binding dispute resolution mechanisms in place for jurisdictions that adopt the OECD guidance. Furthermore, ICC reiterates the importance of guarding against the risk of increased incidence of double taxation and particularly in the event that consensus is not reached.
ICC reiterates that the OECD’s continued work in this area should build on internationally established tax principles to help define the contours of a suitable tax framework for the digitalised economy that encourages business activities, job creation and economic growth.
Concerning Pillar 1, ICC provided comments on double counting and the elimination of double taxation; tax certainty; early dispute prevention mechanisms; proposal for new all-encompassing and innovative mechanism for those MNEs in-scope; investment/ R&D; and customs considerations.
Concerning Pillar 2, ICC provided comments on certainty; simplification measures and administrability; covered taxes; use of losses; tax base; and timing differences.
ICC provided additional comments on specific chapters and sections of the Pillar 1 and Pillar 2 Blueprints.
ICC advocates for a consistent global tax system, founded on the premise that stability, certainty and consistency in global tax principles are essential for business and will foster cross-border trade and investment.