G20: Issued Outcome Statement on the implementation of the OECD Two‐Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy

On 11 July 2023, 138 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) issued an "Outcome Statement" on the Two‐Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. The Outcome Statement summarises the package of deliverables adopted by the Inclusive Framework to address the remaining elements of the Two‐Pillar Solution, including the development of a Multilateral Convention (MLC) that will allow jurisdictions to reallocate and exercise a domestic taxing right over a portion of MNE residual profits (Amount A of Pillar One), a proposed framework for the simplified and streamlined application of the arm’s length principle to in-country baseline marketing and distribution activities (Amount B of Pillar One), the development of Subject-to-Tax Rule (STTR) to enable developing countries to update bilateral tax treaties to “tax back” income on certain intra-group income where the income is subject to low or nominal taxation in the other jurisdiction, and the development of a comprehensive action plan to support the coordinated implementation of the Two-Pillar Solution. Furthermore, the 138 members agreed to refrain from imposing newly enacted digital services taxes or relevant similar measures on any company before 31 December 2024, or the entry into force of the MLC if earlier, provided the signature of the MLC has made sufficient progress by the end of the year.