Global Daily Tax News, Netherlands Addresses Lack Of Pillar One Consensus, (Oct 27, 2023)

Dutch State Secretary for Tax Affairs and Tax Administration Marnix van Rij has addressed the lack of an international agreement on Pillar One of the OECD's two-pillar international tax reform plan, in a newly released letter to the chair of the House of Representatives.

He noted that the Pillar One multilateral convention will come into effect only after a sufficient number of countries have joined - at least 30 percent of countries, providing also that these jurisdictions are home to at least 60 percent of in-scope groups.

He noted, given the vast number of companies headquartered in the US, the US's support for the MLC is essential.

He said that although progress is well advanced, a number of countries have expressed reservations on limited elements (particularly India, Colombia, and Brazil), in particular on the marketing and distribution safe harbor (MDSH), and US authorities have indicated they require extra time to consider signature.

Potentially further delaying the process is the lack of provisions in the MLC for Amount B, he noted, writing: "A number of countries see the implementation of Amount A and Amount B as part of the same agreement [...]."

Given that the standstill on digital services taxes is to lapse should there be no agreement by the end of this year, and with no signing ceremony scheduled before then, he noted that countries - including notably Canada - could have digital services taxes in place, starting January 1, 2024.

On the Dutch position, he said: "The Netherlands remains in favor of an international agreement on Pillar 1 and is committed to completing the MLC as soon as possible, when it is open for signature."

He said: "If at some point there is no longer a clear view of a global agreement, alternatives should be considered. I prefer that for a European solution over a unilateral DST. Besides the fact that it iis not feasible to introduce a unilateral DST in the short term, I remain in favor of an international solution. Thus, the Council of the European Union, for example, indicated that it will keep a close eye on progress and will regularly review the situation in order to find a solution as soon as possible."