Is the “Unified Approach” equal to BEPS 2.0 or a new way of allocating profits between source and market jurisdictions to end the arm’s length principle? This is the main question of the 17-pages document which has been prepared by the experts of WTS Global as a comment on the OECD Secretariat’s proposal for a new tax order.
The Secretariat Proposal for a “Unified Approach” under Pillar One was published in October 2019 and interested parties are invited to send their comments no later than 12 November 2019. Just like last year for Transfer Pricing for Financial Transactions, WTS Global participates also this year in the public consultation round with providing extensive comments on the proposal.
What is Pillar One?
The tax challenges of the digitalisation of the economy were identified as one of the main areas of focus of the Base Erosion and Profit Shifting (BEPS) Action Plan, leading to the 2015 BEPS Action 1 Report. Policy discussion on those challenges remain an important part of the international agenda.
The OECD/G20 Inclusive Framework on BEPS provides for two pillars to be developed with a consensus solution to be agreed upon by the end of 2020.
Pillar One focuses on the allocation of taxing rights and seeks to undertake a coherent and concurrent review of the profit allocation and nexus rules. The proposals articulated so far, would entail solutions that go beyond the arm’s length principle. To help expedite progress towards reaching a consensus solution to Pillar One issues, the Secretariat prepared a proposed “Unified Approach” for public consultation.
WTS Global took advantage of this opportunity to comment on the proposed “Unified Approach” to deal with Pillar One.