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OECD digital tax solution to raise $100 billion annually

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Tax Hot Topics newsletterThe Organization for Economic Co-operation and Development (OECD) released a new economic analysis on Feb. 13 that estimates its two-pillar approach to the challenges of digital taxation would raise more than $100 billion each year. Much of the revenue would be attributed to Pillar Two, which would impose a global minimum tax on certain multinational enterprises (MNEs) and significantly curb profit-shifting. The remaining revenue from Pillar One, which re-allocates some taxing rights regardless of physical presence, would mostly come from 100 large MNEs.

At a high-level, low- and middle-income economies would benefit slightly more under Pillar One than advanced economies, while some investment hubs would lose revenue. Combined with Pillar Two, revenue gains, as a share of corporate tax revenues, are expected to be similar across high-, middle- and low-income economies.

The OECD cautioned that the analysis is meant to be preliminary and could be updated. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting will continue to meet and work toward an agreement by the end of the year.

Contacts:
David Sites
Partner, Washington National Tax Office
T +1 202 861 4104

David Zaiken
Managing Director, Washington National Tax Office
T +1 202 521 1543

Cory Perry
Senior Manager, Washington National Tax Office
T +1 202 521 1509

Mike Del Medico
Manager, Washington National Tax Office
T+1 202 521 1522

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