Member Consultation: OECD’s Report on Pillar One Blueprint and Pillar Two blueprint to address tax challenges arising from digitalisation

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Member Consultation: OECD’s Report on Pillar One Blueprint and Pillar Two blueprint to address tax challenges arising from digitalisation

Tejasvi

@tejasvi

October 15, 2020

Public Policy

353

OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) has been working to develop a consensus based solution to address tax challenges arising out of digitalisation of the economy. In this regard, the Inclusive Framework has released a public consultation document consisting of the Report on Pillar One Blueprint and the Report on Pillar Two Blueprint. These Blueprints reflect convergent views on key policy features, principles and parameters of both Pillars, and identify remaining technical and administrative issues as well as policy issues where divergent views among Inclusive Framework members remain to be bridged.

With regard to Pillar One, there are certain open issues that can only be resolved through political decisions and discussions are ongoing to resolve these pending issues. In particular, comments are invited on the following aspects of the Blueprint.

The activity test to define the scope of Amount A;
The design of a specific Amount A revenue threshold (in addition to a global revenue threshold) to exclude large MNEs that have a de minimis amount of foreign source in-scope revenue;
Development of nexus rule;
Development of revenue sourcing rules;
Framework for segmenting the Amount A tax base, and how it could be further developed to deliver its objectives, etc.

Further, Report on Pillar Two Blueprint identifies a number of issues where further technical work is required and the outcome of this work will then inform the development of model rules. In particular, comments are invited on the following aspects of the Blueprint:

GILTI co-existence;
The treatment of investment funds (as defined in Section 2.3.) under the GloBE rules;
Treatment of dividends and gains from disposition of stock in a corporation;
The treatment of re-organisations under Pillar Two, etc.

In this regard, OECD has sought views from stakeholders on certain policy, technical and administrative issues highlighted in the paper.

We request you to provide us your inputs on the questions specified in the consultation paper and suggestions on how it may be improved so as to ensure fairness and certainty on the incidence of taxation in a manner that imposes least compliance burden. Kindly provide appropriate justification and examples to substantiate your point of view.

As the last date for submitting comments to OECD is December 14, 2020, we would request you to send us your feedback on the proposals from India perspective latest by November 17, 2020 to tejasvi@nasscom.in and jayakumar@nasscom.in

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Tejasvi