G20: The US Proposal for the New Architecture of the Global Tax System

Discussions in the OECD on the taxation of the digital economy propose the creation of rights to tax jurisdictions on the profits of multinational companies operating in the global digitised economy. In addition, it is proposed to apply a minimum effective corporate tax rate. In April, the US at both the G20 summit and the OECD presented the new architecture of the global tax system.

Essentially, the US proposes:

1. Redistribution of jurisdictional tax rights for all multinational enterprises exceeding €20bn in revenue and showing a certain rate of profitability.

Global tax systems
Global Tax System
Photo by the website www.terratrends.net

2. Limit the scope of the global tax system to 100 companies worldwide.

3. Implement a minimum level of taxation.

4. A commitment by the US to reform its own rules by revoking the existing BEAT (Base Fusion and Anti-abuse Tax), adopting a framework with conditions and with the obligation to revoke unilateral action-measures from other countries.

But there are issues that need to be resolved before we move on to such a new framework of conditions, such as the tax dispute resolution process that will entail administrative costs for tax administrations.

In addition, they should be resolved

  • The issue of good information on the enterprises to be included in this new implementation framework.
  • Quantitative data on the redistribution of tax rights by country.
  • Consider the impact on countries’ tax revenues, before lifting unilateral measures such as taxes imposed on the digital economy.

It is certain that sooner or later we are moving towards a new framework for shaping taxation at the level of the Western world, which if successful will apply to all Western companies that export services and products to the world.

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