Thread by @alexcobham

OK, the OECD statement is out - and *now* it's clear why so many countries have expressed reservations.
oecd.org/tax/beps/state…

Circulating beforehand were suggestions that in pillar 1, over 30% of the 'residual' profit could be apportioned to the sales jurisdiction.

No joy for lower-income countries (or anyone who favours a more ambitious move to curtail arm's length abuse): it's left at "20-30%".

Also floated, the idea that the review period could be reduced to less than 7 (SEVEN) years - just in case it turns out not to deliver anything for lower-income countries.

No joy: "review beginning 7 years after the agreement comes into force" - not even 7 years from now...

A little joy on nexus for smaller economies: "For smaller jurisdictions with GDP lower than 40 billion euros, the nexus will be set at 250 000 euros"

No joy: binding dispute mechanisms.

"In-scope MNEs will benefit from dispute prevention and resolution mechanisms... Disputes on whether issues may relate to Amount A will be solved in a mandatory and binding manner"

A small possibility to avoid this for some lower-income ctys

As assumed from 2019, carveouts for finance and extractives.

As for pillar 2... blimey. There's nothing here for lower-income countries. Rate stays as low as "at least 15%", and the STTR that potentially gives something to host countries is only in via multilateral instrument.

So proposal still likely gives >60% of revenues to G7.

*Many* reservations expressed but you'd never know:

"This document sets out the Statement which has been discussed in the OECD/G20 Inclusive Framework on BEPS. 130 member jurisdictions have agreed as of 1 July 2021. It is noted that not all IF members have joined as of today."

So, what does this mean? Where are we, and where do we go next?

For now, the US and the OECD have their way. The G20 is unlikely to blow this up on 9-10 July - after all, this is 'their' process in theory at least. And the arm twisting that got 130 'supporters' at IF is even more extreme at the G20...

So the Biden administration can push on with legislation, making the fair point that this won't disadvantage US multinationals. The major EU states can push on too (although a directive via unanimity may be difficult, given all the reservations already). And other G20 states too

It seems likely that this will, indeed, mark a major turning point against corporate tax abuse. The $1.38 trillion of profit shifting by the biggest multinationals alone is likely to start shrinking, *for the first time*.

This really matters.

But - the deal is weak, complex and deeply unfair; and it has only got to this point by the most aggressive, threatening behaviour that anyone can recall in international tax negotiations.

Can a global minimum tax really survive, if it gives so disproportionate a share of the revenue benefits to the richest headquarters countries?

And can the OECD maintain its position as a rich country club, setting the rules for everyone, when what it delivers is so unequal?

To force this through
by brute strength
during a global pandemic
when the need for revenue to support public health, and economic recovery, is greater than ever
when lower-income countries lose the greatest share of revenue to tax abuse
and the deal makes that inequality worse?

Fascinating and nuanced reaction from @ATAFtax ataftax.org/130-inclusive-…
Welcomes progress, notes on Amount A, "this does not seem like an equitable outcome" - and cautions it's "important that countries join because they want to join it & not because they have been coerced"(!)

The Independent Commission for the Reform of International Corporate Tax (ICRICT) is... not impressed with the OECD. Not even a little bit:

https://twitter.com/icrict/status/1410671892642533380?s=20

India's response to the OECD Inclusive Framework statement is out - very interesting. Recall that India has been under enormous pressure, not least as a forthcoming G20 chair, not to rock the boat (e.g. by agreeing publicly with Argentina on the need for a much better deal)...

Recall too that OECD cut back the Inclusive Framework process so that, as we hear it, members were basically able yesterday to support (everything) or reject (everything). That meant that while many countries had expressed serious reservations in writing, they had to say 'yes'...

...and that allowed the OECD to announce 130 'supporting' countries, which the US emphasised as 90% of the world economy, leaving media to focus on the other 9 that openly refused - Ireland etc., but also genuine supporters of better, including Nigeria (kudos).

India's statement makes absolutely clear that, first, they do not think the OECD deal as it stands is ok; and second, that they expect significant changes before this is a done deal. (h/t @prabhakarks2017)
pib.gov.in/PressReleseDet…

@prabhakarks2017 Take the five paragraphs of that statement one by one. The first says 'a majority supported the high-level statement' - but also, and more importantly, emphasises that it was only on the *outline* of a solution. Nothing more.

@prabhakarks2017 The second paragraph explains the proposal - but makes clear the Indian interest in each by specifying elements, namely the extent of reallocation to market jurisdictions under pillar 1, and the scope of the subject to tax rule under pillar 2. Pointed.

@prabhakarks2017 The remaining text gives the lie to the OECD's "130 countries signed up to our solution". As far as India is concerned, we are very far from a deal - and the key elements that 'remain open' are those that would deliver a less unfair share of the benefits to lower-income countries

The fact that a group of G20 and other IF countries chose to support the process continuing, sometimes under huge diplomatic pressure, should not be misread as the OECD having obtained a consensus on the current, deeply unfair proposals.

Great opportunity with @FES_Brussels today to discuss global tax inequalities, the issues with the OECD tax reform, and the opportunity to shift to the UN, with @Jayati1609 @Evelyn_Regner and @robinwilson250 - sign up now!
brussels.fes.de/e/social-europ…