March 11, 2022

WASHINGTON – Today, global tech trade association ITI submitted feedback on the European Commission’s proposed Directive to implement Pillar Two of the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework’s (IF) Two-Pillar Approach. In the comments, ITI welcomed European Union’s continued commitment to the Two-Pillar Approach but expressed concerns about the proposed timeline, which does not provide sufficient time for review, coordination, or implementation.

“We have welcomed the European Union’s commitment to reaching a multilateral, consensus-based solution, and continue to demonstrate our support for multilateral engagement as the sole means of addressing the underlying tax policy challenges identified by participating governments,” ITI wrote in its comments. “We cannot emphasize enough the importance of regularly consulting with the business community to ensure that outcomes are ones with which taxpayers and tax administrations can consistently and easily comply. This is especially relevant given that negotiations are ongoing for Pillar One and elements of Pillar Two. Not only will there be interactions between the two pillars, but companies will be undertaking significant and time-consuming system changes to administer these fundamental reforms to the global tax system. Overall, the comment enumerates our concerns about the Commission’s advancing a Directive to implement the GloBE rules on a timeline that does not provide sufficient time for review, coordination, or implementation by tax administrations and taxpayers alike.”

In the comments, ITI outlined several policy and process considerations to help inform the discussion, including:

  • Promote an effective common approach to implement GloBE rules as the current timeline does not provide adequate time to consider the Model Rules nor the yet-to-be-released Commentary.

  • Consider the practical consequences associated with an accelerated implementation timeline, as tax authorities and businesses cannot begin to plan, design, test, and implement the requisite costly and time-intensive IT system changes until they know what the rules are.

  • Conduct an impact assessment incorporating data that reflects adoption of post-2016 tax reforms and newly adopted design decisions.

ITI and its members have consistently supported the negotiations at the OECD/G20 Inclusive Framework, including through the development of Principles for a Solution in the OECD’s Project for Addressing the Tax Challenges of the Digitalisation of the Economy in May 2020 and regular technical engagement in March 2022, February 2022, April 2021, December 2020, December 2019 (Pillar Two), and November 2019 (Pillar One).

Read the full comments here.

Public Policy Tags: Tax Policy