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The Organisation for Economic Co-operation and Development (OECD) is racing toward meeting an ambitious target by the end of the year that could radically change the way all multinational enterprises (MNEs) are taxed. The target—a final report—was set forth in January 2019 under the cover of addressing the digital economy.

However, the two fundamental “pillars” of this project are far broader than that. As the OECD’s base erosion and profit shifting (BEPS) project concluded that it is impossible to ring-fence the digital economy, the OECD is now setting the foundation of the new international tax system that reaches far beyond the digital economy with a global anti-base erosion (GloBE) framework, known as Pillar Two. So, what will happen at the end of this sprint to the finish? It may be meaningful to look at the current state of Pillar Two, and the developments under Pillar One, before looking at our future international tax system.

Because much of the attention in 2020 has focused on Pillar One, the pillar that initially addresses digital taxes, many MNEs have taken the view that this 2020 workstream is irrelevant to their business. This view may seem understandable if one’s business is not primarily digital or consumer-facing. However, it misses a critical point: that key elements of both Pillar One and the global minimum tax framework/GloBE will affect all MNEs, and further input will be key to whatever consensus-based solution will be produced for Pillar Two.


* Originally published in the Tax Executive Magazine


Gene Tien works with US and foreign multinationals on transfer pricing (TP) and other economic valuation issues, with a primary focus on the planning and dispute resolution of intangible property (IP) transactions and other value-added TP flows. Dr. Tien also works on economic development issues on a pro bono basis — including international fiscal devolution, water rights, and domestic social justice research. He regularly presents and writes about developments in international TP policy.


Joshua D. Odintz is a partner in and on the management committee of Baker McKenzie’s North American Tax Practice Group. Joshua held high-level government positions with both the US Department of the Treasury and the Senate Finance Committee. He previously served as a Senior Advisor for Tax Reform to the Assistant Secretary at the US Department of the Treasury, where he advised Senior Treasury officials on tax reform options and issues. Joshua also served as the Chief Tax Counsel to the President’s National Commission on Fiscal Responsibility and Reform, and was instrumental in formulating the tax proposals that were contained in the Commission’s report, entitled the Moment of Truth. Additionally, Joshua served as the Acting Tax Legislative Counsel at the Treasury. Joshua is a frequent speaker at IFA, TEI, ABA Tax Section, NY State Bar Tax Section, Practicing Law Institute and Federal Bar Association tax meetings and conferences.