DIGITAL

Digital economy. In mid-October, G20 finance ministers backed a move to continue a debate on this issue, suspended this year because of Covid 19, until mid-2021, and by then to produce an update of cross-border tax rules on the digital economy. Likewise, the Organization for Economic Cooperation and Development (OECD) launched a public consultation process (Pillar 1 and Pillar 2) on the international tax reforms under discussion, which will allow those interested to send in their submissions until December 14 to [email protected]. Once comments are received and taken into account, the OECD will advance on a specific tax proposal that could serve as a model for member countries in 2021.

Although the representatives of the different countries agreed to extend the discussions, the French Finance Minister, Bruno Le Maire, said that the European Union must continue with plans for a digital tax throughout the bloc, in case the global talks within the OECD framework fail.

On the other hand, the public consultation opened by the OECD is divided into two pillars: the first seeks to provide the countries of origin with greater tax rights over certain multinational digital services companies, in order to avoid unilateral measures; while the second introduces a global minimum tax (at a rate to be determined) to avoid shifting benefits to low-tax jurisdictions. Those who want to present their observations should do so in word format and under the subject “OECD Center for Tax Policy and Administration”.

Next steps

Despite the agreement between the ministers present, it is possible that the countries will continue to regulate the matter unilaterally and make it difficult to apply a global tax rate to digital services in the future. However, the public consultation got underway by the OECD will allow for the viewpoints of various sectors to be considered, making clear the intention to advance in these negotiations. All interested parties can send in their comments in this regard until next December 14.