WASHINGTON – Today, the U.S. Department of the Treasury announced a request for public input on the draft OECD/G20 Inclusive Framework Multilateral Convention to Implement Amount A of Pillar One (Pillar One MLC) and accompanying documents. The Inclusive Framework’s Task Force on the Digital Economy released the current draft text of the Pillar One MLC, the Explanatory Statement to the Pillar One MLC, and the Understanding on the Application of Amount A Certainty (describing certain administration and dispute resolution parameters) following intensive negotiations. The three documents represent a years-long effort to find broad consensus among over 140 Inclusive Framework countries on a reallocation of taxing rights that better reflects the modern global economy.
“The Treasury Department considers the release of the draft Pillar One documents a key step forward in the Pillar One negotiations. These documents reflect countless hours of discussions, across multiple U.S. administrations, and among hundreds of negotiators. Treasury stands behind the negotiations, which have resulted in many difficult compromises by all sides with respect to both the design of the partial reallocation of taxing rights and the elimination of discriminatory digital services taxes and similar measures,” said Assistant Secretary for Tax Policy Lily Batchelder. “However, as the cover note in the documents states, Pillar One represents a uniquely significant reform to the international tax system. Because of the breadth and complexity of the changes proposed, we view public input as critical to our process—to ensure transparency, to facilitate the resolution of several remaining open issues, and to hear whether the proposed framework would be workable for U.S. taxpayers and other stakeholders.”
Pillar One is being negotiated as part of the OECD/G20 Inclusive Framework Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy. The Pillar One architecture is designed to update the allocation of international taxing rights over a portion of the profits of the largest and most profitable multinational corporations (“Amount A”) and to provide greater tax certainty and stability on certain cross-border transactions (“Amount B”). The draft Pillar One agreement would also explicitly require signatory jurisdictions to withdraw discriminatory digital services taxes or similar measures. The Pillar One documents released by the Inclusive Framework relate to Amount A; work on Amount B is ongoing.
Certain key pieces of the Pillar One MLC have already been subject to OECD public consultations and the comments received have been critical to informing previous Inclusive Framework negotiations. However, the recent release represents the first time that a complete draft text of the Pillar One MLC documents is available to the public. The Treasury Department is especially interested in comments related to novel issues identified by a review of the complete text, implementation and administrability issues (including the balance between simplification and technical precision), and technical adjustments to address errors or clarify the operation of the Pillar One MLC provisions.
Those interested in providing input should submit written comments by Monday, December 11, 2023. All comments must be submitted electronically to the following email address: OTP_Pillar1MLC@treasury.gov.
Please note that all comments received will be made public.