12
Acknowledged
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two...
Conclusion
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two will be carried out in line with agreed conventions and frameworks.34 In July 2022 the OECD announced that the multilateral convention which will implement Pillar One globally will be open for jurisdictions to sign in mid- 2023, with the aim of the Pillar One reforms coming into force in 2024. This represents a slippage of one year since the initial announcement in October 2021, although HM Treasury said it still expects the timetable to be met.35 It has proved easier for countries to agree on the destination of reallocated profits than where they should move from.36 HM Treasury considered that the main challenge would be to ensure that the key signatories to the Convention actually implemented it.37 Most of all, the cooperation of the United States is crucial, given its opposition to existing Digital Services Taxes.38 29 Qq 6,7 30 Qq 55, 56 31 Q 28 32 HM Treasury, Autumn Statement 2022, 17 November 2022. 33 Qq 60–62 34 Qq 56–58 35 Qq 42, 43; C&AG’s Report, para 1.4, 1.12, 1.14 36 Q 28 37 Qq 18, 59 38 Qq 82, 100–102 12 The Digital Services Tax 3 Future challenges in taxing digital businesses Consequences of delay in introducing the OECD reforms
Government Response Summary
The government agrees with the committee's observation, reiterating the aim to finalise Pillar One rules in 2023 and the process for its global implementation, including parliamentary scrutiny.
Government Response
Acknowledged
Government Response
Acknowledged
HM Government
Acknowledged
The government agrees with the Committee’s recommendation. Target implementation date: 2024 Amount A of Pillar One reallocates taxing rights over 25% of profits in excess of a 10% profit margin of multinational businesses with global revenue greater than €20 billion, from the jurisdictions in which valuable activities are undertaken to the jurisdictions where customers are located. Amount B of Pillar One seeks to simplify and streamline the application of the arm’s length principle to baseline marketing and distribution activities with a view to addressing the needs of low-capacity jurisdictions and reducing the potential for disputes between tax administrations and taxpayers. The aim is for the design of Pillar One rules to be finalised in 2023. Amount A will then only come into effect globally after a critical mass of jurisdictions signs and ratifies the multilateral convention. Countries would be required under the convention to remove DSTs once Amount A has come into effect. After the multilateral convention has been agreed, Parliament will be able to scrutinise and ratify the convention through normal Parliamentary procedures before Amount A of Pillar One is implemented.
Source
Committee
Public Accounts Committee
Inquiry
Digital Services Tax
Report
Forty-Fourth Report - The Digital Services Tax
05 Apr 2023
HC 732
Addressee Bodies
HM Treasury
Timeline
Recommendation age
3.3 yrs
Report published
05 Apr 2023