The OECD released a detailed consultation document on 13 February 2019, commencing a 17 day window for stakeholders to submit comments before a public consultation in March on proposals to address the tax challenges arising from the digitalisation of the economy. A 19 February OECD announcement extended the deadline to require responses by 6 March, providing a full three week consideration period, as originally announced.

The consultation followed nearly two years of work, and with less than 18 months remaining until final recommendations will be made, the release of an Inclusive Framework policy note on 29 January 2019 foreshadowed this formal consultation. That
note outlined at a high level the four options (under two pillars) that will form the basis of the final year of the OECD’s work in this area (see our tax policy bulletin of 1 February 2019 detailing the policy note and background).


More depth of analysis is now included on each of the options under consideration, all of which would radically alter the allocation of taxing rights between countries for all international businesses. The options are being examined by 127 countries of the OECD Inclusive Framework on a ‘without prejudice’ basis, and are broadly:

  • Measures to address base-eroding payments (investor pickup, and restrictions in tax deductibility / treaty benefits, where other countries levy low rates of tax on income or gains); with
  • New rights to tax profits based on either (or a combination of) specific proposals focused on attributing value to:
    • Marketing intangibles
    • User participation
    • Significant economic presence

The OECD consultation document signals an expectation of significant changes in both the allocation of taxing rights between countries across the whole economy, and the ability of businesses to benefit from low effective tax rates in some jurisdictions. How significant the final, consensus-based measures will be depends on the countries of the Inclusive Framework finding ample common ground - something that still seems elusive
but is usually reached at some level.

Our tax policy bulletin of 15 February 2019 on the consultation document provides full details and insight.