UK and International Tax news

OECD Issues Outcome Statement On BEPS 2.0

Thursday 13th July 2023

The OECD has released an Outcome Statement on the Two Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.

The Statement, approved by 138 members of the OECD/G20 Inclusive Framework on BEPS, summarizes the package of deliverables developed to address the remaining elements of the Two‐Pillar Solution including:

  • The text of a multilateral convention (MLC), which allows IF members to exercise a domestic taxing right over a portion of the residual profits of MNEs (Amount A of Pillar One).
  • The proposed framework for the simplified and streamlined application of the arm’s length principle to in-country baseline marketing and distribution activities (Amount B of Pillar One).
  • The Subject-to-tax rule (STTR) under Pillar Two will enable developing countries to update bilateral tax treaties and tax certain intra group income, interest, royalties and other payments where such income is subject to low or nominal taxation in the other jurisdiction, at an STTR minimum rate of 9%.
  • A Multilateral Instrument, amending the treaties that it covers, together with an explanatory statement, to facilitate the implementation of the STTR. The MLI will be open for signature from 2 October 2023.

The Statement make reference to the progress made and the need to prevent delay or disruption to the ratification of the MLC. Subject to at least 30 jurisdictions accounting for at least 60% of the Ultimate Parent Entities of in-scope MNEs signing the MLC before the end of 2023, members agree to refrain from imposing newly enacted DSTs or relevant similar measures, as defined in the MLC, on any company between 1 January 2024 and the earlier of 31 December 2024, or the entry into force of the MLC.

Assuming sufficient progress has been made by that date towards the entry into force of the MLC, IF members may agree to extend this commitment to the earlier of 31 December 2025, or the entry into force of the MLC.

The OECD is to prepare a comprehensive action plan to support the swift and coordinated implementation, with additional support and technical assistance to enhance capacity for implementation by developing countries.

 

If you would like further detail on the Outcome Statement, please contact Keith Rushen on 0044 (0) 207 486 2378.

 

Contact Us