6 February 2020
There is now immense pressure to reform the way multinationals are taxed. The status quo – unchanged in essence for a hundred years – is widely seen by the public and policymakers as inadequate for the modern world and the digital economy. Last year, the OECD proposed a radical proposal to reshape the international tax system, creating new rights for countries to tax multinationals.
We look at the current state of the OECD proposals and assess both their potential impact, and the likelihood they will be adopted. If the OECD process fails, many countries are likely to adopt unilateral measures and, with US companies the obvious targets, there is a real risk of retaliation by the US – even a trade war. Sadly that is in our view now a very plausible outcome.