On Oct. 8, the Organization for Economic Cooperation and Development (OECD) announced agreement on a plan to overhaul the way taxes are determined on a global basis. The purpose of the agreement is to address the challenges of taxing large multinational enterprises (MNEs) in a digital world. OECD countries have been working on this framework since the OECD began its base erosion and profit shifting (BEPS) initiative in 2015. The project started out with 15 major work streams or actions and finally reached tentative agreement on BEPS and how to tax the digital economy.
Of the six countries that previously had refused to sign on to the plan, Ireland, Hungary, and Estonia changed their positions and joined the group. Kenya, Nigeria, and Sri Lanka are the remaining holdouts. Pakistan reversed its prior position and no longer supports the agreement. Many developing countries continue to have concerns with the current plan but have not bowed out. On Oct. 31, the plan was adopted by the G-20, the intergovernmental group of the 19 largest world economies and the European Union.