OECD: Public consultation documents on withdrawal of DSTs under Pillar One, implementation under Pillar Two
Documents released on withdrawal of digital services tax under Pillar One, implementation under Pillar Two
Public consultation documents on withdrawal of digital services tax under Pillar One
The Organisation for Economic Cooperation and Development (OECD) today issued—as part of the ongoing work of the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) in implementing the two-pillar solution to address the tax challenges arising from the digitalisation of the economy:
- Under Pillar One, a public consultation document on draft multilateral convention (MLC) provisions on digital services taxes (DSTs) and other relevant similar measures [PDF 540KB]
- Under Pillar Two, an implementation package consisting of:
As explained by today’s OECD release,
- The draft MLC provisions reflect the commitments with respect to the removal of all existing DSTs and other relevant similar measures and the standstill of future measures, which are an integral part of achieving Pillar One’s goal of stabilizing the international tax architecture. This follows the recent release of the consultation document on Amount B which completes the consultation on all the building blocks of Pillar One.
- Comments are requested by 20 January 2023, and instructions for submitting comments can be found in the consultation document.
- The guidance on safe harbours and penalty relief includes the agreed terms of a transitional country-by-country (CbC) reporting safe harbour that effectively removes the obligation of calculating the GloBE effective tax rate for a multinational enterprise’s (MNE’s) operations in lower-risk jurisdictions in the initial years, thereby providing relief to MNEs in respect of their GloBE compliance obligations as they implement the rules. The document also includes the framework for the development of permanent safe harbours as simplified income and tax calculations, as well as a common understanding as to a transitional penalty relief regime which requires careful consideration for applying penalties or sanctions where an MNE has taken reasonable measures to ensure the correct application of the GloBE rules. The public consultation document on the GloBE information return seeks input on the amount and type of information that MNE groups will be expected to collect, retain and/or report for the application of the GloBE rules and possible simplifications that could be incorporated in the GloBE information return as well as the ability of the MNE group to provide alternative data points. The public consultation document on tax certainty for the GloBE rules outlines various mechanisms, including dispute prevention and dispute resolution, for achieving tax certainty under the GloBE rules. The document outlines the expected next steps in connection with the development of these mechanisms and identifies a number of areas where stakeholder input would be valuable.
- Comments on the consultation documents are requested by 3 February 2023, and instructions for submitting comments can be found in the consultation documents.
- Going forward, the Inclusive Framework expects to release administrative guidance on the interpretation or administration of the global minimum tax on a rolling basis, with the first package of administrative guidance to be released in early 2023.
- Work is also proceeding on the finalization of the subject to tax rule and the related multilateral instrument to assist in its implementation
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