The OECD hopes to hammer out details of its proposal to adapt the international tax rules for the digital age in January and reach political agreement in June, the organization's tax chief said.
Speaking October 17 to reporters in Washington, Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, expressed optimism for agreement at the inclusive framework’s June meeting and being able to report on its progress in July.
“Things are moving,” Saint-Amans said, adding that if agreement is achieved in the summer of 2020, then the implementation phase would begin. “Then the question is, what will be the instrument to implement it and how much time to develop [rules]? But the goal is to move as fast as possible if we have political agreement. For the time being we are focusing on political agreement.”
Saint-Amans spoke right before the G-20 finance ministers’ October 17-18 meeting on the sidelines of the IMF/World Bank annual meetings. OECD Secretary-General Ángel Gurría on October 18 will present to the group his tax report, which includes the secretariat’s discussion draft, published October 9.
The draft outlines the latest proposal under consideration for increasing market countries’ taxing rights through a combination of significantly revised nexus rules and a hybrid formulary transfer pricing system. It combines aspects of three proposals included in its May work program under pillar 1, which focuses on new profit allocation and nexus rules. The consultation period closes November 12, and a public consultation is scheduled for November 21-22 in Paris.
Another discussion draft, on pillar 2, which relates to global minimum taxation, will be released in November, and a public consultation is scheduled for December.
Meanwhile, the OECD continues work on elements of its impact assessments of the proposal, Saint-Amans said. The secretariat is working with inclusive framework members on refining the data being used, he added.
“We have the analytical work done so that we can do the simulations, refining the data, we are in that process,” Saint-Amans said. “And we hope that [by] mid-November, countries will have a better sense of the data and the implications so we can aim to make this information public by year-end.”
Gurría’s report included initial impact assessment results, showing that the OECD’s proposals to modernize corporate tax rules for the digital age would boost global tax revenues and wouldn’t negatively affect the investment landscape. Low- and middle-income economies were also shown to gain more revenue than advanced economies under pillar 1, although investment hubs stand to lose large chunks of their tax bases.