OECD digital tax solution to raise $100 billion annually

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.

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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