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Window Closing in OECD Digital Tax Talks

The U.S. Treasury has not engaged in the discussions since June

After U.S. officials withdrew from months-long international negotiations on a global digital tax plan over the summer, the Organization for Economic Cooperation and Development (OECD) is attempting to build consensus this week on a tweaked plan.

The OECD convened a two-day meeting starting today to jumpstart discussions among 137 countries on a global tax overhaul to address how “consumer-facing” digital giants like Apple, Google, Facebook and Twitter are taxed in countries where they have users. The OECD’s work has taken on some urgency as some countries have grown impatient and said they will come up with their own digital tax plans if international consensus is not reached by the end of 2020.

The OECD’s two-pillar plan would allocate some profits of multinationals to the countries where they have users or consumers, as well as create a global minimum tax rate. Under this second pillar, countries would be able to tax a company that isn’t paying at least a minimum rate in another country. Negotiators have not agreed on what a minimum rate would be.

Treasury Secretary Steven Mnuchin has not reengaged in the global tax discussions since June, but he has previously suggested making the first pillar a “safe harbor,” so that companies could choose for themselves whether to participate or not. Other countries have said a safe harbor for multinationals would undermine the plan’s objectives.

House and Senate tax writers have generally backed Treasury’s moves to protect U.S. companies from disproportionate taxes abroad.

“We need our partners to be more realistic about this, and I think far more open to the U.S.’s ideas,” Rep. Kevin Brady (R-TX), the top Republican on the House Ways and Means Committee, said over the summer.

This article was provided to OSAE by the Power of A and ASAE's Inroads.

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