Ruth Mason (Virginia; Google Scholar), The 2021 Compromise, 172 Tax Notes Fed. 569 (July 26, 2021):
A 12 months in the past, I revealed an article arguing that the OECD/G-20 base erosion and profit-shifting undertaking left worldwide tax at a crossroads with a number of apparent different programs — extra multilateral cooperation, elevated unilateralism that will threaten the positive factors of BEPS, or a reversion to a predominantly bilateral regime [The Transformation of International Tax, 114 Am. J. Int’l L. 353 (2020); see also Symposium On Ruth Mason’s The Transformation Of International Tax]. The settlement in precept on pillars 1 and a couple of, introduced July 1 in an announcement by 130 of the inclusive framework nations, means that nations overwhelmingly choose multilateralism over the opposite choices.
This text provides preliminary reactions to the settlement and seeks to contextualize it into bigger debates. …
The nations launched the assertion on July 1 to fulfill a self-imposed deadline. The US and France have been threatening one another with digital taxes and retaliatory tariffs. Regardless of leaving some points open, the July 1 assertion indicators that the nations haven’t failed and received’t — at the very least for now — descend to commerce battle. However they’ve set for themselves one other impossibly quick deadline (the October G-20 assembly in Venice) to work out the small print of the proposal. And implementation of the proposals described on July 1 will rely (at the very least from the U.S. perspective) on treaty companions dropping their digital taxes.
The U.S. Senate just lately proved that it’s nonetheless able to ratifying uncontroversial treaty protocols, however who is aware of what the evenly divided Senate will make of nexus on demand. Lastly, no matter particulars the nations ultimately hammer out on pillar 2 would require a major derogation to accommodate GILTI (and, if the Biden administration has its approach, a SHIELD (stopping dangerous inversions and ending low-tax developments) that differs from the OECD-contemplated undertaxed funds rule. Thus, the July 1 assertion is a vital marker, however vital points stay excellent.