On 10 July, Ecommerce Europe shared a letter to the Organisation for Economic Cooperation and Development (OECD) to voice some concerns on the potential instability of the international taxation arena of the next months.
Addressing the Tax Policy Department and Director Mrs. Manal Corwin, the letter invites the OECD G20 Inclusive Framework to consider an extension of the current Pillar One’s moratorium on the publication of unilateral Digital Services Taxes (DSTs). The moratorium is a temporary solution proposed by the OECD Two-Pillar agreement on international taxation of October 2022, which aims to ensure fairness and stability in the global tax framework. The moratorium is however due to terminate in December 2023 and to be replaced by the effective agreement on Pillar One, which is the sole part of the Two-Pillar framework that still needs an international endorsement.
In this context of uncertainty, the discussion of unilateral measures tackling digital services is gaining ground in certain Countries. The introduction of DSTs or similar measures risks hindering the work of the Two-Pillar agreement and creating instability and legal uncertainty in the international tax system. Furthermore, at EU level, while Pillar Two has been already proposed by the Commission and approved by the Member States, Pillar One has not yet been converted into a legislative proposal, which is causing further uncertainty because of the interplay the two Pillars have in ensuring a balanced and stable direct taxation framework at the national level.
In July, the OECD G20 Inclusive Framework is expected to provide an update on the status of discussions. Ideally, the Pillar One agreement should be reached within the next months and be implemented before the end of the DST moratorium on 31 December 2023. Should the OECD not deliver a Pillar One solution before the end of the current moratorium, Ecommerce Europe calls on the OECD to consider extending the moratorium beyond 2023. You can find our letter here.
Ecommerce Europe will monitor the developments at the OECD and EU level around global taxation framework to ensure that no discriminatory measures are imposed against digital services, and that there is no overlapping and gold-plating effect between the rules put forward at OECD/international level, at EU level and at national level.
