The final BEPS plan has clicked into place: here it is in pictures
Yesterday the OECD released a significant announcement: 130 countries have in principle agreed to build a world in which some number of large multinationals face a minimum rate of income tax of at least 15% on a base of income that will be roughly harmonized in some fashion, and at least some rearranging of the tax base will occur according to where the consumer is located, though it is still not clear just how much at this point. As always the devil will be in the details and there will be a lot of devils. I put together these couple of quick illustrations of the key parts of the consensus, just to keep all the big picture pieces straight in my head:
It is interesting that we now find out that when the OECD uses the term “consensus” this does not mean universal agreement. Nine countries either haven’t yet agreed or won’t ever agree. Those are Barbados, Estonia, Hungary, Ireland, Kenya, Nigeria, Peru, Saint Vincent & the Grenadines, and Sri Lanka. Moreover many countries absolutely have a list of reservations but are included as agreeing in principle. And of course the United States will not be signing on to any multilateral agreement, as the report acknowledges when it describes the US unilateral regime ‘coexisting’ with the global one.
The US media and administration appears laser-focused on the minimum tax rate to the exclusion of the redistribution aspects of the plan. Some are characterizing the entire project as 130 countries agreeing with a proposal strictly conceived and designed by the United States, which is saying the quiet part out loud as far as inclusive frameworks and equal footings go. So the announcement also tacitly reflects some pretty serious ongoing power imbalances and it remains to be seen how those end up playing out as the concrete technical rules take shape.
