Brussels, 07 October 2019
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WK 10921/2019 INIT
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MEETING DOCUMENT
From:
Presidency
To:
Working Party on Tax Questions (Digital Taxation)
Subject:
Tax challenges arising from digitalisation
Delegations will find attached a document in view of the Working Party on Tax Questions (Direct
Taxation - Digital) on 11 October 2019.
WK 10921/2019 INIT
LIMITE
EN
7.10.2019
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1 Background
1. OECD’s Programme of Work to Develop a Consensus Solution to the Tax
Challenges Arising from the Digitalisation of the Economy (PoW) was adopted at
the Inclusive Framework on BEPS (IF) at its May 2019 meeting. It was endorsed
by the G20 ministers at their meeting on 9 June 2019.
2. PoW includes Pillar 1 and 2 proposals. Pillar 1 focuses on the allocation of taxing
rights and seeks to undertake a coherent and concurrent review of the profit
allocation and nexus rules. In the background of Pillar 1 there are different
proposals (user participation, marketing intangibles and significant economic
presence) made by some IF members. The PoW includes different approaches
(the modified residual profit split method, the fractional apportionment method
and distribution-based methods) that need to be explored. Pillar 2, on the other
hand, includes a Global anti-base erosion proposal (GloBe) and explores the
possibilities for other jurisdictions to apply the rules when income is taxed at an
effective rate below a minimum agreed rate. The OECD work is aimed at
achieving a consensus-based solution by the end of 2020.
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