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Tax challenges arising from the digitalisation of the economy
The OECD’s Base Erosion and Profit Shifting Project (BEPS) aims to secure and sustain the international tax system and increase tax equity among traditional and digital businesses. Whatever the outcomes of the programme and the concrete proposals on the reallocation of taxing rights and global anti-base erosion, international businesses in all industries are likely to be affected. Are you prepared?
The 15 actions developed in connection with the OECD/G20 BEPS Project could have far-reaching implications for just about every area of your business. Our matrix of practical guidance and support will help you see where you stand and negotiate the potential minefield.
The digitalisation of the economy has social and economic impacts in many areas, including taxation and, in particular, the current international tax system. This system was designed in an era when companies provided services and goods mainly through physical presence locally or internationally. With the emergence of purely digital companies and subsequent digitalisation of goods and services companies alike, it has been widely recognised that the current international tax system is no longer fit for purpose.
In order to adapt existing tax systems, members of the OECD/G20 Inclusive Framework on BEPS are looking at a comprehensive, consensus-based solution to what has been considered the two main challenges arising from the digitalisation of the economy.
The OECD IF considers that addressing these challenges through a coordinated international response is key to maintaining a functioning international tax system and avoiding unilateral measures by individual countries.
Read more on our blog here.
The OECD IF is undertaking work under a Pillar 1 approach and will:
For more information about Pillar 1, please refer to our blog section.
The work that the OECD IF is undertaking under a Pillar 1 approach would be based on a set of four rules:
For more information about Pillar 2, please refer to our blog section.
Impact Simulation & Analysis
With the help of our proprietary PwC technology tools & dashboards you can simulate Pillar 1 & 2 impact and analyse the potential impact on your organisation. Contact us for more information and guidance on how our tools & advice can help prepare you for BEPS 2.0 reality.
The OECD, Inclusive Framework and G20 are expected to release documents in the first half of October that set out the consensus and additional views on Pillar 1 and Pillar 2 in the project framework previously announced. Pillar 1 looks at the attribution of revenues to market jurisdictions. Pillar 2 deals with the imposition of a minimum tax. The documents will provide details of the provisions agreed by the Inclusive Framework of 140 countries together with additional comments from the Secretariat and G20 which mandated the project.
Please register below to join our OECD digitalisation announcement discussion.
In this webcast it was discussed how the G7 Finance Ministers’ agreement might affect your business.
On 5 June, the G7 Finance Ministers announced an agreement in which participating countries committed to new taxing rights that would allow countries to reallocate some portion of profits of large multinational companies to markets, as well as enact a global minimum tax rate of at least 15%.
Watch our webinar to find out.
https://pages.pwc.ch/core-contact-page?form_id=7014L00000016uTQAQ&lang=en&embed=true
David McDonald
Jim Matthews
Partner, Transfer Pricing and Value Chain Transformation, Geneva, PwC Switzerland
+41 58 792 95 60
Rolf Röllin
Jacob Parma
Director - Transfer Pricing & Value Chain Transformation, Zurich, PwC Switzerland
+41 58 792 44 87
Christa Elsaesser
Etienne Michaud
Manager - Transfer Pricing and Value Chain Transformation, Geneva, PwC Switzerland
+41 58 792 96 70