THE OECD has sought public inputs on tax challenges arising from the digitalization of the economy. The publication of the consultation document was foreshadowed with the release of a Policy Note by the Inclusive Framework on January, 2019 and follows the agreement of members of the Inclusive Framework to examine proposals involving two pillars; one pillar that focuses on the allocation of taxing rights and a second pillar that addresses remaining BEPS issues. The work will be carried out as the Inclusive Framework continues to work towards a consensus-based long-term solution in 2020. 

Following a mandate by G20 Finance Ministers in March 2017, the Inclusive Framework on BEPS, working through its Task Force on the Digital Economy (TFDE), delivered an Interim Report in March 2018, Tax Challenges Arising from Digitalization– Interim Report 2018 . One of the important conclusions of this report is that members agreed to review the impact of digitalization on nexus and profit allocation rules and committed to continue working together towards a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019.

Since the delivery of the Interim Report, the Inclusive Framework further intensified its work and several proposals emerged that could form part of a long-term solution to the broader challenges arising from the digitalization of the economy and the remaining BEPS issues. The work on these proposals is being conducted on a “without prejudice” basis; their examination does not represent a commitment of any member of the Inclusive Framework beyond exploring these proposals. In this context, the Inclusive Framework agreed to hold a public consultation on possible solutions to the tax challenges arising from the digitalization of the economy on March 13 and 14, 2019 at the OECD Conference Center in Paris, France. The objective of the public consultation is to provide external stakeholders an opportunity to provide input early in the process and to benefit from that input.

As part of the public consultation, the consultation document describes the proposals discussed by the Inclusive Framework at a high level and seeks comments from the public on a number of policy issues and technical aspects. The comments provided will assist members of the Inclusive Framework in the development of a solution for its final report to the G20 in 2020.