In the end, it will be necessary to wait until October for an agreement at the OECD on the main features of a global solution on digital taxation, Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy and Administration, announced in an online conference on Monday 4 May.
The organisation, which has repeatedly stated that the Covid-19 pandemic did not disrupt the international negotiating timetable (see EUROPE 12416/20), finally resigned itself to cancelling the plenary meeting of the OECD/G20 Inclusive Framework on BEPS, scheduled for 1 and 2 July in Berlin, where agreement on the main political features of the reform was expected to be reached. A simple virtual meeting to “take stock” is envisaged instead.
The plenary meeting as well as the agreement were postponed to October. The date has not yet been set, but it is expected to take place before the G20 finance ministers’ meeting on October 15-16. The Inclusive Framework hopes to be able to meet physically in Berlin, but a virtual meeting could also be organised, depending on the circumstances.
The objective remains to reach a consensual solution by the end of the year, confirmed Pascal Saint-Amans. Apart from “one or two countries” that consider it more reasonable to delay the work for one year because of Covid-19, he said, many countries want to stick to the agreed timeframe.
The nature of the package to be presented is still unclear. “What will be delivered in October, we don’t know yet. It’s being negotiated and it’s hard to predict”, Mr Saint-Amans said. Nevertheless, he sees the emergence of a vision that Pillar I (digital taxation) ‘Amount A’ should focus on digital, even if US and Chinese opposition persists.
Furthermore, the overall agreement may not be complete in October and members of the Inclusive Framework could, he said, opt for a “staged process” which would then shift the decision on “some of the aspects” of the reform to 2021.
A “new impetus” on minimum taxation
Pascal Saint-Amans also felt that the crisis had given a “new impetus” to Pillar II of the reform, minimum corporate taxation, due to the increasing pressure on public finances and a growing zero tolerance of companies that engage in tax evasion.
“We can see a renewed appetite from a number of countries but it does not mean consensus”, he said.
In addition, impact assessments continue to be discussed. While members of the Inclusive Framework are currently opposed to the release of the results, the OECD’s Centre for Tax Policy and Administration hopes to publish them by the end of the summer.
In fact, the OECD is considering including the impact of Covid-19 in these analyses, including losses for many companies, higher profits for others or potentially greater dependence on the digital sector as well. (Original version in French by Marion Fontana)