OECD’s Tax Reform Gets Pushed Back to 20241st June 2022
Nobody ever said implementing global tax reform would be easy, but it may be proving even more difficult than its supporters originally thought. The global tax deal was originally slated for 2023 implementation, but negotiations have been tricky and now the rollout is looking more like 2024—at the earliest. According to the Financial Times, the OECD said the two-pillar plan has “no hope of being implemented in 2023.” Why not? Getting major countries to agree to a two-pillar plan that taxes companies where they do business as opposed to where they have a physical presence isn’t easy, as individual countries stand to benefit (or not) in unique ways. Pillar One affects only about 100 companies—in large part, U.S. tech giants—and will require a new treaty to come into force. Given that countries haven’t yet come to consensus on what that would include, it’s already too late to meet the original deadline.
Meanwhile Pillar Two brings about a 15% global minimum tax and the OECD has seen pushback from several countries. The U.S.’ Build Back Better brought tax legislation in line with the OECD’s new reform, but the Senate has yet to pass it. The EU is experiencing problems, too. For the EU to make the global tax plan a directive, it needs a unanimous vote from all member states, but Poland is still holding out wanting assurance that Pillar One and Pillar Two will be rolled out together. We’ll see in 2024.