Reforming the international tax system to address the tax challenges arising from the digitalization of the economy and restoring stability to the international tax framework have been a priority of the OECD under its BEPS initiative in recent years.
The OECD secretariat suggested a two-pillar approach in 2019 that was intended to ensure fairness and equity in tax systems and reforming the international tax framework in the face of new and changing business models. The stated goal of the pillar one proposal is focused on nexus and profit allocation whereas pillar two is expressed as addressing the remaining BEPS challenges by ensuring large companies pay a minimum level of tax on income regardless of where this arises.
Bob Kee, Executive Director from Transfer Pricing and Audrey Chin, Director, from Transfer Pricing noted it is crucial for the government to relook at the current tax incentive regime and improve sustainable investment factors and enablers - such as issuance of other forms of government assistance, quality of workforce, quality of infrastructure, business friendly policies etc - to remain competitive as an investment destination in the region.
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