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Recent Developments on the Two-Pillar Approach
With the Inclusive Framework (IF) statements of 1 July and 8 October 2021, the rationale of BEPS 2.0 seems to be cast in stone: a two-pillar approach leading to establishing new nexus and profit allocation rules as well as a minimum effective tax. This article demonstrates how the IF came to this direction of travel and provides an overview of what has happened during 8 years of discussion within the OECD and the IF.
1. Overview
With the Inclusive Framework (IF) statements of 1 July and 8 October 2021, the rationale of BEPS 2.0 seems to be cast in stone: a two-pillar approach leading to establishing
new nexus and profit allocation rules for the approximately 100 multinational groups that meet the threshold of 20 billion € revenue combined with a 10 % profitability under pillar one;
a minimum effective tax of 15 % to be applied at jurisdictional level under pillar two.
This article demonstrates how the IF came to this direction of travel. Its genesis lies with the S. 2372013 Base Erosion and Profit Shifting (BEPS) project identifying the digital economy as causing increasing pressure on the established tax principles, culminating with the publication of the BEPS Action 1 Report on 5 October 20...