The OECD received a specific mandate from the G20 Hamburg in 2017, and it is actively exploring changes to its Model Tax Convention in order to close off cross-border tax loopholes and ensure that multinationals pay taxes where they generate profits. The OECD/G20 BEPS Project is the most ambitious multilateral international tax policy initiative ever undertaken, aiming at “ensuring fairness, coherence, transparency and that taxation is aligned with where economic activity takes place”.
The OECD proposal is based on two pillars: pillar one addresses the business location-taxation nexus rules, reviews the current profit allocation and proposes the grant of new taxation rights. It is mainly based on sales, rather than on physical presence as is the case in the currently binding rules. Pillar two aims to establish a minimum corporate taxation level worldwide in order to combat profit-shifting and to reduce tax competition. It does not specifically relate to digital businesses.
WAN-IFRA endeavoured to bring the news media point of view before the OECD, both by participating in consultations and in-person meetings. This Media Policy Briefing by Elena Perotti, Executive Director of Media Policy and Public Affairs, summarizes the status of the work performed by the OECD so far, and sheds some light on this very complicated process.
Note: In February 2021, The European Commission revealed that a future legislative proposal on digital Taxation would be based on the OECD’s ongoing work rather than earlier EU proposals. In addition, it has been revealed that the tax would aim to kick in during 2023.