Thursday, 26 September 2019

Questions (25)

Michael McGrath


25. Deputy Michael McGrath asked the Minister for Finance the status of the OECD BEPS process; the next steps involved; when he expects an agreement among the OECD members; the progress made on a review as to the sustainability of corporation tax receipts here in the coming years; and if he will make a statement on the matter. [39059/19]

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Written answers (Question to Finance)

On 28 May 2019, the OECD BEPS Inclusive Framework adopted a Programme of Work to develop a consensus solution to the tax challenges raised by digitalisation. This was subsequently endorsed by G20 Finance Ministers at their meeting in Fukuoka on 8-9 June 2019, and by G20 Leaders in Osaka on 28-29 June 2019.  This Programme of Work splits the continuing work among two separate Pillars.  

Subsequently the OECD Secretariat has been working on a “unified approach” based on significant commonalities of the three proposals under Pillar One of the Programme of Work.  This proposal will be published in October and it is anticipated that there will be a public consultation during November.

My position has consistently been that Pillar One proposals examining the issue of where companies generate their value and whether new concepts of value creation need to be recognised might provide a basis upon which a sustainable agreement could be found at the OECD. Nevertheless there remains many questions to be answered before we have a workable solution which achieves consensus on this proposal.

Pillar Two of the Programme of Work seeks to examine whether minimum effective tax rate rules should be agreed.  As I have said previously, this Pillar remains problematic, not least because of a lack of clarity as to what it is the proposal is trying to achieve. I remain to be convinced of the validity and appropriateness of this proposal in reaching an agreed outcome to addressing the tax challenges of digitalisation.

I have long acknowledged that further change to the international tax framework is necessary to ensure that we reach a stable global consensus for how and where companies should be taxed.  A certain, stable, and globally agreed international tax framework is vital to facilitate cross border trade and investment.  The Programme of Work has targeted an agreed outcome by the end of 2020 although further time would then be required for any agreement to be implemented by countries whether domestically or multilaterally.

Work on assessing all of the issues around the sustainability of corporation tax receipts and the potential fiscal vulnerabilities this may cause is ongoing. At a recent sitting of the Budget Oversight Committee I indicated that I would consider whether the expected publication date of March 2020 could be brought forward.