The OECD Secretariat published a second public consultation document on the Global Anti-Base Erosion (GLoBE) proposal under Pillar Two of the OECD’s work on the tax challenges arising from the digitalisation of the economy. This document follows proposals published earlier in 2019. The aim is to advance international negotiations on the development of a coordinated set of rules to address ongoing risks from structures that allow Multinational Enterprises (MNEs) to shift profits to jurisdictions where they are subject to low taxation.

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) adopted a Programme of Work in May 2019, consisting of a two-pillar approach to address the tax challenges of the digitalisation of the economy. The consultation published covers ‘Pillar Two’ of the Programme of Work.

The consultation is seeking input from stakeholders on specific technical issues of the GLoBE proposals, specifically:

• The use of financial accounts as a starting point for determining the tax base under the GloBE proposal as well as different mechanisms to address timing differences;
• The extent to which a multinational enterprise can combine high-tax and low-tax income from different sources, taking into account the relevant taxes on such income in determining the effective (blended) tax rate on such income; and
• Stakeholders’ experience with, and views on, carve-outs and thresholds that may be considered as part of the GLoBE proposal.

Under the auspices of CCAB-I, the Institute respond to the consultation.