Pillars 1 & 2: Are We Close to a Deal?

On October 12, the OECD/G20 Inclusive Framework published the latest version of its proposals for fundamental reform of the international tax system for business profit. A consultation period closed on December 14.

These proposed reforms are arguably much more significant than those emerging from the OECD/G20 BEPS project. The BEPS project essentially aimed to reduce profit shifting opportunities. Pillars 1 and 2 go beyond that. Pillar 1 seeks a reallocation of taxing rights among countries; rights will be taken from some countries and allocated to market countries. Pillar 2 does seek to address remaining profit shifting opportunities, but it also seeks to ensure that multinationals pay a minimum level of tax. These proposals thus go significantly beyond BEPS because they seek to affect fundamental and structural change to the international tax system.

Whilst the published reports reflect considerable efforts on the part of the Inclusive Framework and the OECD secretariat, many questions remain. What aspects of the proposals are generally agreed both from a technical and a political perspective? Where is more work required? Will there ever be a consensus in favour of either, or both, pillars? What is likely to happen if no consensus is reached?

The Oxford University Centre for Business Taxation convened an online conference on November 23. Pascal Saint-Amans and Achim Pross from the OECD set out the current state of play and the challenges still to be faced. They were followed by four members of the Inclusive Framework, who reflected on some of the differing views around the table. There was then commentary and discussion from business and academia. This conference aimed at shedding light on where we are and where we are likely to go, at what is clearly one of the critical junctures in the history of the international tax system.

Times shown are for the UK

13.30 Welcome

Michael Devereux, Director, Oxford University Centre for Business Taxation

13.35 - 14.05 The state of play

Chair: Michael Devereux, Director, Oxford University Centre for Business Taxation

• Pascal Saint-Amans, Director Centre for Tax Policy and Administration, OECD, and   
• Achim Pross, Head of the International Co-operation and Tax Administration Division Centre for Tax Policy and Administration

      An introduction to the current state of the proposals

14.05 - 15.20 Views from the Inclusive Framework Steering Group

Chair: Richard Collier, Associate Fellow, Oxford University Centre for Business Taxation

• Gaël Perraud, Deputy Director, International Taxation and European Affairs, Ministry of Economy and Finance, France
• Rasmi Ranjan Das, IRS, Joint Secretary (FT&TR-I), Ministry of Finance, India
• Marlene Parker, Chief Tax Counsel, Tax Administration, Jamaica
• Mike Williams, Director Business and International Tax, HM Treasury UK

15.20  - 15.30 Break

15.30  - 16.40 Other views

Chair: John Vella, Assistant Director, Oxford University Centre for Business Taxation

• Amy Roberti, Head of US Federal Government Relations, Proctor and Gamble
• Barbara Angus, Global Tax Policy Leader, EY
• Glenn Price, Deputy Group Tax Director, Vodafone
• Michael Devereux, Director, Oxford University Centre for Business Taxation

16.40 – 17.00 Next steps

Chair: Michael Devereux, Director, Oxford University Centre for Business Taxation

• Pascal Saint-Amans, Director Centre for Tax Policy and Administration, OECD  

      Where next: what are the challenges before agreement can be reached?