IFA 2022: Leading nations in taxation are willing to embrace pillar two

During the IFA Congress, international tax leaders and departing OECD chief Pascal Saint-Amans pledged to work harder to implement pillar two.

Despite obstacles in the tax system, officials from several nations and the OECD's retiring tax head expressed optimism that jurisdictions will implement pillar two during the IFA Congress in Berlin.

"There is a misreading of the logic of pillar two and how it goes. But we have some countries implementing the change ," according to Pascal Saint-Amans, head of the OECD's Centre for Tax Policy and Administration, citing the most recent pillar two consultation in Switzerland.

"We might have some small hiccups, but the logic is extremely strong," Saint-Amans continued during the panel discussion on September 7. As previously reported, he would step down from his position by the end of October.

The adoption of pillar two, which mandates that major corporations within the country-by-country reporting scope be taxed at a minimum tax rate of 15%, has been strongly supported by nations like Germany.

Sven Giegold, state secretary at Germany's Federal Ministry for Economic Affairs and Climate Action, stated the nation must move through with the implementation of the global minimum tax on September 4.

In a tweet, Giegold stated that they were taking independent action to "ultimately enforce European law."

Saint-Amans expressed his confidence at IFA that nations pressing for the implementation of pillar two will create a "domino effect" and maybe lead to a worldwide agreement behind the OECD tax system.

"The pillar two logic is unlike transparency where you need everybody here – it’s enough to have a first mover, which is significant enough in terms of the size of multinational enterprises," he claimed

The regulations are too complicated and the deadline is too aggressive, according to Huey Min Chia-Tern, deputy commissioner of the Inland Revenue Authority of Singapore, but the government would strive "harder than ever" to embrace pillar two.

Gal Perraud, director of European and international taxes at the tax policy division of the French Ministry of Economy and Finance, emphasized the necessity for budgetary consolidation owing to the negative aspects of excessive tax competitiveness on the same panel.

In reference to various tax structures, he remarked, "It’s important to set a frame for this tax competition."

A "key element" of the OECD effort, according to Perraud, is that for coordination to be formed, nations must accept the same set of regulations.

France agreed to the model regulations and initiated the EU procedure, therefore the implementation work has already begun.

"It’s going so fast – it’s a major achievement. We will do it ," Perraud assured.

Although some governments may be beginning to support pillar two, a global consensus is still uncertain because several countries, like the US, are still hesitant to join the OECD concept.

By fLEXI tEAM