BEPS 2.0 – Part 2: Pillar One

The first part in this series looked at the OECD's work in relation to BEPS 1.0 and introduced the subsequent work undertaken by the Inclusive Framework under BEPS 2.0, specifically the Pillar One and Pillar Two proposals. The second part of this series looks at the Pillar One proposal in greater detail.

The OECD proposed a “unified approach” to Pillar One in October 2019, and this approach was endorsed by the Inclusive Framework in January 2020 as the basis for a consensus-based solution. Pillar One is concerned with nexus and profit allocation, which present particular challenges for the international tax system. The Inclusive Framework has therefore sought to develop a new nexus for profit allocation that is less reliant on physical presence and instead places a greater emphasis on the user/market jurisdiction.