The Federation of German Industries (FDI) hosts its annual tax conference, addressing the tax challenges or the digitization of the economy. In this conference, among others OECD tax officials discussed the status of Pillar 1 and 2.
Moderators and panelists during the event were Pascal Saint Amans (Director of the OECD Center for Tax Policy and Administration), Achim Pross (Head of the OECD International Cooperation and Tax Administration Division), Martin Kreienbaum (Director General of International Taxation at the Federal Ministry or Finance and Chair of the OECD Committee on Fiscal Affairs), and several leading representatives from tax departments or large multinationals.
Pascal Saint-Amans briefly discussed the revision of profit allocation and nexus rules (Pillar 1) and Martin Kreienbaum discussed Pillar 2: the global anti-base erosion proposal. In 3 panel discussions the participants had discussions of the challenges of the revision of profit allocation and nexus rules, the global anti-base erosion proposal, and strengthening dispute avoidance and dispute resolution mechanisms.
Pascal Saint-Amans made it clear that the time for discussion or the architectural and fundamental issues is over. He stressed that it is time for action now, and that the focus should be on negotiations instead of elaborating on technical details. Martin Kreienbaum stated it would be harmful to keep questioning the proposal. He is urged for international coordination and implied that Germany is willing to compromise on Amount A and Amount B if there is an agreement on tax dispute avoidance and resolution mechanisms. Achim Pross described some solutions. He said to be committed to ensure that Amount A and respective nexus rules should be born together. In addition, he made it clear that it will be unlikely that various stakeholders from developing countries will substantially compromise on the issue of arbitration. Another interesting discussion concerned sovereignty. Pascal Saint-Amans described the motivation of the unified approach as “strengthening tax sovereignty by limiting tax sovereignty.” Criticism about the increased complexity of the rules was waved away by Pascal Saint-Amans, saying that the transfer pricing system was already highly complex.