ICC Comments On OECD Pillar 2 Public Consultation Document

ICC appreciated the opportunity to provide comments on the Organization for Economic Co-operation and Development (OECD)’s public consultation on the GloBE Proposal under Pillar Two as part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework) to address the tax challenges of digitalisation. 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.

ICC Comments on OECD public consultation document on the Global Anti-Base Erosion (GloBE) Proposal under Pillar Two: Addressing the tax challenges of the digitalisation of the economy

ICC appreciated the opportunity to provide comments on the Organization for Economic Co-operation and Development (OECD)’s public consultation on the GloBE Proposal under Pillar Two as part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework) to address the tax challenges of digitalisation. 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.

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 solution for its final report to the G20 by the end of 2020. ICC fully supports a harmonised approach to ensure that international tax rules remain relevant and applicable in an increasingly digitalised global economy.

The GloBE proposal under Pillar Two seeks to comprehensively address remaining base erosion profit shifting (BEPS) challenges linked to the digitalisation of the economy by ensuring that the profits of internationally operating businesses are subject to a minimum rate of tax intended to curb a  race to the bottom on corporate taxes.

ICC supports the work of the OECD to combat tax evasion and aggressive tax planning and the implementation of the BEPS initiative, one of the the premises of which is to ensure taxation where value is created.  ICC recognises that addressing tax avoidance is a key political issue for many countries, but respectfully recommends that new policies should take into account the degree to which recent policy changes, such as BEPS and the US tax reform have addressed this issue.

ICC strongly recommends a simplification of measures to drive design and implementation and that any proposals under Pillar Two should avoid creating an additional layer of rules, which would increase complexity and complicate administrability of the international tax system.  The interaction of the GloBe proposal with other existing international and domestic tax rules would be an essential consideration in this regard.   Before further developing details on the various components of Pillar Two, a framework clarifying the interaction of the GloBE proposal with existing international and domestic tax rules, the interaction with Pillar One as well as the interaction and/or prioritisation between the four component parts will be required.

ICC agrees that the GloBE proposal should be designed in a manner that is consistent with principles of simplicity that would minimise compliance and administration costs as well as the risk of double taxation.

ICC provided specific comments on rule co-ordination and double taxation; scope and carve-outs; as well as tax determination and blending.

 

 

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