Tax Notes Talk
Making Progress: Updates on the OECD Tax Reform Plan
Dec 20, 2024
Stephanie Soong, Tax Notes Chief Correspondent, dives into the latest from the OECD’s ambitious two-pillar reform project. She discusses updates on the proposed 15% minimum tax for multinationals and its implications for developing nations. The complexities of the Pillar 1 framework to streamline transfer pricing are addressed, alongside negotiations stalling over its mandatory adoption. Upcoming legal challenges in global tax reform and the fiercely debated digital services taxes are also explored, revealing a turbulent road ahead as the OECD aims for a 2025 rollout.
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Quick takeaways
- The OECD's two-pillar plan addresses international corporate tax reform, focusing on profit allocation and a global minimum tax rate of 15%.
- Significant legislative advances by countries like the UK and Canada demonstrate broad international compliance with the OECD's tax rules amid ongoing disputes.
Deep dives
Overview of the OECD's Two-Pillar Proposal
The OECD's two-pillar proposal aims to revamp the international corporate tax system to address challenges posed by the digital economy. Pillar one focuses on revising profit allocation and nexus rules, while pillar two introduces a global minimum tax rate of 15% for large multinational enterprises. Recent updates include the publication of consolidated administrative guidance and a streamlined process for identifying compliant jurisdictions under pillar two. These developments highlight the OECD's ongoing efforts to modernize tax rules in response to globalization and digitalization.
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