OECD confirms G20 to tackle tax challenges regarding economy’s digitalisation

The 129 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit shifting have officially adopted a Programme of Work outlining the process for reaching a new global agreement on taxing multinational companies.

According to the document calls, international discussions surrounding two main pillars must be intensified. It was approved during the 28-29 May plenary meeting of the Inclusive Framework.

The first pillar is to explore potential solutions for working out where tax should be paid and on what basis. It will also consider what portion of profits should be taxed in the jurisdictions where clients or users are located.

Meanwhile, the second pillar surrounds the design of a system to ensure multinational enterprises, both within the digital economy and beyond, pay a minimum level of tax. This pillar is intended to enable countries to protect their tax base from profit shifting to low or no-tax jurisdictions.  

OECD Secretary-General Angel Gurria will present the Programme of Work to G20 Finance Ministers for their support during the 8-9 June ministerial meeting in Fukuoka, Japan.

He said: “Important progress has been made through the adoption of this new Programme of Work, but there is still a tremendous amount of work to do as we seek to reach, by the end of 2020, a unified long-term solution to the tax challenges posed by digitalisation of the economy.”