WASHINGTON – Today, global tech trade association ITI issued new principles to guide the Organisation for Economic Co-operation and Development (OECD) as it addresses the tax challenges of the digitalization of the economy. ITI’s principles are centered on the need to produce a stable, coherent, consensus-based solution to our international tax challenges, including in the OECD’s work on Pillars One and Two.
“The OECD’s effort to address the tax challenges of the digitalization of the economy represents a critical opportunity to ensure a stable, cohesive global tax system,” said ITI President and CEO Jason Oxman. “The continued proliferation of unilateral tax measures, like digital services taxes, injects uncertainty into our international tax system and further necessitates a global solution. The OECD process is the best venue to realize this solution. We hope negotiators consider and adhere to these consensus principles when advancing an agreement.”
ITI’s principles reaffirm its commitment to the OECD process and recommend to negotiators that a final agreement:
- Create a coherent system, rather than a menu of options for countries to choose from;
- Not ring-fence the digital economy;
- Secure the repeal of unilateral measures like digital services taxes once an agreement is reached, as well as a promise not to enact new measures;
- Incorporate and build on long-standing and well-founded underlying principles of international taxation; and
- Include strong, predictable, and timely dispute prevention and resolution mechanisms under both Pillars.
These principles are designed to be equally applicable whether or not an agreement includes the “safe harbor” proposal put forward by the U.S. government in December.
In the specific principles for Pillar One and Pillar Two, ITI encourages the OECD to adhere to sound, rational, and consistently-applied tax policy objectives while acknowledging business realities; ensure that double taxation is avoided and that the proposal will be administrable; and use a global aggregated approach for the minimum tax, with the U.S. tax code’s Global Intangible Low-Taxed Income (“GILTI”) provision being considered as meeting the requirements for the kind of minimum tax countries must put in place.