Discussion Papers 2021

CIRJE-F-1161	"Still Under-Taxing the Digital MNE? Assessing the Tax Principles of Pillar One in the BEPS Project"
Author Name	Ogawa, Hikaru
Date	February 2021
Full Paper	PDF file
Remarks

Abstract
A new principle of international taxation that gives taxing rights on the profits of digital multinational firms (MNEs) has been proposed in Pillar One of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. This note delineates this tax principle in a simple model and points out that while the new framework allows taxation of MNEs profits that could not be taxed before, it includes incentives for excessive reductions in the corporate tax rate.
Keywords: Corporate tax; International taxation; BEPS project; Digital MNE

Abstract

A new principle of international taxation that gives taxing rights on the profits of digital multinational firms (MNEs) has been proposed in Pillar One of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. This note delineates this tax principle in a simple model and points out that while the new framework allows taxation of MNEs profits that could not be taxed before, it includes incentives for excessive reductions in the corporate tax rate.

Keywords: Corporate tax; International taxation; BEPS project; Digital MNE