The OECD proposes new nexus rules and formula-based allocation of large digital and
consumer-oriented MNE’s residual profits to market states where the respective MNEs serve
their customers (Pillar One Proposal, POP) combined with a worldwide minimum taxation
regime (Pillar Two Proposal, PTP).
POP creates a hybrid system of international profit allocation because it comes on top of the
traditional arm’s length principle (ALP). The new hybrid system causes the risk of double
taxation due to overlapping tax bases. In addition, MNEs have new tax planning opportunities
when determining the amount of residual profits in the market states.
PTP suggests an internationally agreed effective minimum tax rate combined with a
(residence-based) income inclusion rule and a (source-based) undertaxed payment rule. In
principle, the income inclusion rule would be sufficient and avoid an otherwise necessary
priority rule. Without setting a minimum tax rate, the allocation of MNEs’ profits to market
states in effect also establishes a minimum taxation regime. Therefore, waiving POP as well as
PTP in favor of a full-fledged formula-based profit allocation scheme is a valid tax policy option.
POP and PTP call for an unprecedented level of international tax cooperation. States have to
agree on the details of the tax base as well as on the tax rate. Credibility is paramount for such
far-reaching international cooperation. Up to now, the OECD has not envisaged an
international tax agency, which has the power to establish an effective enforcement
procedure.
If the OECD fails to establish a long-term international tax agreement, ongoing tax competition
may convert the corporate income tax into a pure benefit tax. National tax policy could adapt
by placing a higher personal income tax burden on corporate profit distributions to resident
shareholders as well as on resident shareholders’ gains from the sale of corporate shares.
Übersetzter Titel:
Anmerkungen zum Arbeitsprogramm der OECD/G20:
Gewinnzuweisung und Mindestbesteuerung
(Deutsch)
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