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OECD: Global anti-base erosion proposal under Pillar Two; consultation document released

OECD: Global anti-base erosion proposal, Pillar Two

The Organisation for Economic Cooperation and Development (OECD) today issued a consultation document concerning certain aspects of the global anti-base erosion (GloBE) proposal under Pillar Two.


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As explained by today’s OECD release, the consultation document focuses on the tax challenges of digitalisation of the economy.

This part of the OECD’s work under the base erosion and profit shifting (BEPS) process has been divided into two pillars:

  • Pillar One addresses the allocation of taxing rights between jurisdictions and considers various proposals for new profit allocation and nexus rules.
  • Pillar Two (the “GloBE proposal”) focuses on the remaining BEPS issues and seeks to develop rules that would provide jurisdictions with a right to "tax back" when other jurisdictions have not exercised their primary taxing rights or the payment is otherwise subject to low levels of effective taxation.

The consultation document [PDF 734 KB] concerns Pillar Two issues.  Comments are specifically requested on three technical design aspects of the GloBE proposal:

  • The use of financial accounts as a starting point for determining the tax base
  • The extent to which a multinational enterprise (MNE) can combine income and taxes from different sources in determining the effective (blended) tax rate on such income
  • Stakeholders’ experience with, and views on, carve-outs and thresholds that may be considered as part of the globe proposal

The comments are expected to assist members of the Inclusive Framework in the development of a solution for a final report to the G20 in 2020. Comments are requested by Monday, 2 December 2019.

The purpose of this report is to provide text of the consultation document. KPMG will provide a more detailed discussion of the consultation document in a future report.

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