Briefing
Unify and conquer: the OECD's 'unified approach' to pillar one
The OECD Secretariat's proposals for a unified approach to pillar one on taxing the digital economy do not yet reflect consensus by the Inclusive Framework members, but they are designed to help forge a way through competing proposals. The proposals
anticipate a new taxing right based on a new nexus rule not dependent on physical presence. They combine traditional aspects of the arm's length principle, where these work well, supplemented by a formulaic approach in areas which are causing tension.
The rules are designed to extend beyond highly digitalised models, to large, consumer-facing businesses. The guiding principle behind the proposal is improving certainty and creating simple rules that are easy to administer, in the hope of stabilising the international tax system and achieving consensus on a global solution by the end of 2020. The proposals are out for consultation until 12 November 2019.
This briefing was originally published in Tax Journal on 18 October 2019.