Global Daily Tax News, US Treasury Seeks Feedback On Amount A MLC, (Oct 16, 2023)

The US Treasury Department has launched a two-month consultation on the recently released draft Multilateral Convention to Implement Amount A of Pillar One and accompanying documents.

The BEPS Inclusive Framework agreed the draft MLC's release on October 11, alongside an explanatory statement and the Understanding on the Application of Amount A Certainty (describing certain administration and dispute resolution parameters).

The Treasury said the release of the three documents "represent a years-long effort to find broad consensus among over 140 Inclusive Framework countries on a reallocation of taxing rights that better reflects the modern global economy."

"The Treasury Department considers the release of the draft Pillar One documents a key step forward in the Pillar One negotiations. These documents reflect countless hours of discussions, across multiple US administrations, and among hundreds of negotiators. Treasury stands behind the negotiations, which have resulted in many difficult compromises by all sides with respect to both the design of the partial reallocation of taxing rights and the elimination of discriminatory digital services taxes and similar measures," said Assistant Secretary for Tax Policy Lily Batchelder. "However, as the cover note in the documents states, Pillar One represents a uniquely significant reform to the international tax system. Because of the breadth and complexity of the changes proposed, we view public input as critical to our process – to ensure transparency, to facilitate the resolution of several remaining open issues, and to hear whether the proposed framework would be workable for U.S. taxpayers and other stakeholders."

As well as allocating more corporate tax revenues to market jurisdictions, the draft Pillar One agreement also explicitly requires signatory jurisdictions to withdraw digital services taxes or similar measures.

Announcing the consultation, the Treasury said: "Certain key pieces of the Pillar One MLC have already been subject to OECD public consultations and the comments received have been critical to informing previous Inclusive Framework negotiations. However, the recent release represents the first time that a complete draft text of the Pillar One MLC documents is available to the public. The Treasury Department is especially interested in comments related to novel issues identified by a review of the complete text, implementation and administrability issues (including the balance between simplification and technical precision), and technical adjustments to address errors or clarify the operation of the Pillar One MLC provisions."