The Organisation for Economic Co-operation and Development (OECD) is racing toward meeting an ambitious target by the end of the year that could radically change the way all multinational enterprises (MNEs) are taxed. The target—a final report—was set forth in January 2019 under the cover of addressing the digital economy.

However, the two fundamental “pillars” of this project are far broader than that. As the OECD’s base erosion and profit shifting (BEPS) project concluded that it is impossible to ring-fence the digital economy, the OECD is now setting the foundation of the new international tax system that reaches far beyond the digital economy with a global anti-base erosion (GloBE) framework, known as Pillar Two. So, what will happen at the end of this sprint to the finish? It may be meaningful to look at the current state of Pillar Two, and the developments under Pillar One, before looking at our future international tax system.

Because much of the attention in 2020 has focused on Pillar One, the pillar that initially addresses digital taxes, many MNEs have taken the view that this 2020 workstream is irrelevant to their business. This view may seem understandable if one’s business is not primarily digital or consumer-facing. However, it misses a critical point: that key elements of both Pillar One and the global minimum tax framework/GloBE will affect all MNEs, and further input will be key to whatever consensus-based solution will be produced for Pillar Two.

* Originally published in the Tax Executive Magazine

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