On 29 January, the OECD released a policy note (approved by the 127 members of its Inclusive Framework (IF)) and hosted a webcast which together outlined options that the IF will examine for addressing the tax challenges of the digitalisation of the economy.
The policy note recognises "that the digitalisation of the economy is pervasive, raises broader issues, and is most evident in, but not limited to, highly digitalised businesses". Importantly, the webcast noted explicitly that the proposals may go beyond the arm's length principle and also consider innovative types of nexus that would not require a physical presence. Four proposals are being examined under two pillars, both of which affect how business broadly is taxed, not only those businesses that are “highly digitalised” (i.e. digital native businesses).
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