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As predicted for some time, the OECD finally had its Wayfair moment. Compelled to take action to bring digital taxation under a uniformed international standard and prevent countries from going “unilateral” with their own digital tax regimes, the OECD has proposed to not only expand the taxing rights of most digital market countries, but also re-write international taxation, well beyond the original OECD/G20 Base Erosion and Profit Shifting (BEPS) initiative.
The OECD appears well on its way to following the US Supreme Court’s June 2018 South Dakota v. Wayfair decision by signaling its intention to abandon the longstanding physical presence standard for determining nexus. Instead, the OECD envisions a new global tax framework in which remote sellers operating beyond state and country borders are taxed by the countries in which their customers live according to specific sales thresholds.
On October 9, the OCED released a 21-page public consultation document that describes a proposal from the OECD Secretariat (the division that carries out the OECD’s policy work) for a “Unified Approach under Pillar One.” This document represents the latest chapter—a pivotal one—in the sweeping revision and re-alignment of global tax policy and the operative international tax rules that the OECD has been working on for years.
In its 2015 BEPS Action Plan, the OECD identified the tax challenges of an increasingly digital economy as a primary focal point. A subsequent document published by the G20 Finance Ministers (working in concert with the OECD) in March 2018, Tax Challenges Arising from Digitalization – Interim Report, examined this issue in more detail. A joint OECD/G20 Inclusive Framework earlier this year grouped the global tax policy revision effort into two categories: Pillar One, which includes user participation, marketing intangibles, and significant economic presence proposals; and Pillar Two, which focuses on other BEPS-related expanding issues, such as an “alternative” minimum global tax for multinational organizations…..
READ THE FULL STORY ON MNE TAX :
https://mnetax.com/the-oecds-unified-approach-to-digital-taxation-36517