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  • Taxing the digital economy - a virtual reality for Financial Services Register

Taxing the digital economy - a virtual reality for Financial Services

Date: 25 October 2019
Time: 11:00 - 12:00

  

Natalie Frisby
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  • Summary

The OECD /G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) adopted a Programme of Work in May 2019, consisting of a two-pillar approach to address the tax challenges of the digitalisation of the economy. The OECD Secretariat has now published a public consultation document with a proposal for a “unified approach” under Pillar One. The proposal does not represent a consensus view and is being made by the Secretariat to facilitate the negotiation process.

The proposals are a significant departure from the current international tax rules and are not just about tech businesses; it is about the future of allocation of profit amongst international groups in a modern, highly digital economy. In its consultation document, the OECD has for the first time signalled an intent to potentially narrow the scope to sectors but suggests that further discussion is required as to whether a carve out for financial services is appropriate. Meanwhile, whilst the work on the Pillar One and Pillar Two proposals continues, some countries, including the UK and France, are taking unilateral action with the introduction of their own Digital Services Tax.

Alongside UK Finance we will outline and discuss:

  • The background to these changes and the broad challenges digitalisation creates for the international tax system
  • Latest thinking from the OECD regarding the proposals included its consultation document
  • Unilateral measures adopted by countries pending a global consensus
  • Identify the potential impact of these developments on business operating models and their tax profile
  • Discussions we have been having with the financial services industry, more generally around the impact of these rules.

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