At this critical moment in negotiations to reform international tax rules, the G24 lower-income countries have published their views on the proposals, which we consider state what is needed for an acceptable and durable agreement to be reached. Our analysis of the key components of a possible final package shows the importance of the points made by the G24, and why lower-income countries should not be pressurised into accepting rules that would damage them, and prevent any further progress towards more comprehensive and effective reforms.
Read MoreWe provide here our analysis of the proposals in the Statement published 1 July 2021 by the OECD from the Inclusive Framework on BEPS for addressing the tax challenges arising from digitalisation of the economy. We hope that this will help inform public debate and the continuing negotiations.
Read MoreWe publish here a statement made to the FISC Subcommittee of the European Parliament made by Sol Picciotto. coordinator of the BMG. It outlines how a strong global corporate minimum tax could benefit almost all states, including all EU member states, by increasing corporate tax revenues and ending the beggar-thy-neighbour race to the bottom in corporate tax rates.
It urges all states, and the EU as a bloc, to support the proposals from the Biden administration for such a strong tax, at a minimum rate of at least 21%, which could be ensured by modifying the OECD proposed global anti-base-erosion tax (GLOBE), to allocate undertaxed profits fairly between states based on a formula reflecting each multinational’s real activities in each state, as outlined in our proposal for a minimum effective tax rate for multinationals (METR). A new paper on the METR includes economic impact assessments for countries, showing that almost all would benefit, losses would be limited to a few with average per capita GDP over $40,000.
Implementation by the EU should follow the dual approach proposed by the Commission in 2018, applying this formulaic minimum tax to non-EU countries while introducing within the EU a common consolidated corporate tax base (CCCTB).
Read MoreWe have submitted comments to the UN Tax Committee’s consultation on a discussion draft to revise the Royalties article to clarify its application to software. Unfortunately, in our view the draft is seriously defective, since it is based on and would perpetuate a confused and misleading understanding of copyright introduced in 1992 in the OECD Commentary. This interpretation was rejected by many states, many of which have chosen to clarify their actual treaties by including a specific mention of computer programs as examples of copyright work. This draft proposes a different approach which could have retroactive effects on these treaties and deprive many states of taxing rights. We urge the Committee to adopt instead a simple clarification of the model based on these existing treaties. To contribute to a rapid conclusion of this work we provide a draft for five paragraphs of Commentary to accomplish this task.
Read MoreWe republish here an article written by several BMG members, together with other colleagues, first published in Tax Notes International on 15 February 2021.
The article explains and analyses our suggested revised version of the OECD’s proposed global anti-base erosion tax (the GLOBE), a minimum effective tax rate for multinationals (the METR). This presents in more detail the proposal first made in our comments of December 2019 on the Pillar Two proposals.
Our METR is a more equitable, far less complex, and more practical variant on the GLOBE, and could be introduced by a coalition of willing states.
Read MoreThese blueprints are a testament to the commitment and efforts of many dedicated government and OECD officials, and provide many building blocks for potential solutions. Regrettably however, the proposals as a whole do not deliver on the mandate for the BEPS project to align taxation of multinational enterprises (MNEs) with where their activities occur and value is created.
Read MoreThe BMG has made a submission to the UN Committee of Tax Experts on the proposal, supported by its members from developing countries, to clarify that article 12 on Royalties in the UN model convention includes payments for the use of software.
September 2020
Read MoreWe welcome the Committee’s decision to work independently on the tax consequences of digitalisation, and support the proposal of one of its members to give priority to developing a new definition of taxable nexus for automated digital services. To cover services more generally, it should also review provisions of the UN model tax treaty on taxation of income from services and related aspects of attribution of profits.
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