We have submitted our comments to the public consultation on the discussion draft on a simplified method of allocating rights to tax MNE profits referred to as Amount B.

We strongly support the need for simplicity and certainty in allocating the rights to tax MNE profits, but this can only be achieved through formulaic methods. We analyse the proposal and explain why in our view, the approach now suggested would be both ineffective and inappropriate. An MNE’s profits from sales result from a range of activities which can only fictitiously be attributed to different entities. In practice wholesale distributors will have valuable information and data on local markets and customers. Limiting Amount B to supposedly ‘baseline’ stripped-risk functions will result in a systemic under-allocation of profit to sales jurisdictions.

Simplification should be done in line with the general approach in Pillar 1, of a formulaic allocation from the total global profits of the MNE, and the present proposal should be revised to present a formulaic method based on group-wide profitability.

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We have submitted our comments to the public consultation by the European Commission on the proposal it will develop on Business in Europe - Framework for Income Taxation (BEFIT).

We strongly support the Commission’s longstanding view that the fairest and most efficient approach to taxation of business profits within the EU’s single market is by adopting a common corporate tax base together with formulary apportionment. Indeed, in our view this approach should be adopted worldwide. The time is now ripe, since detailed rules to implement this approach have now been formulated as part of the OECD/G20 BEPS project, on consolidated accounts, and the definitions of assets, employees and sales by destination.

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We have submitted our comments to the public consultation on the draft provisions on withdrawal of Digital Services Taxes and ‘relevant similar measures’.

Each country should carefully evaluate its potential gains from Amount A against the losses from measures proscribed under the MLC, following a full public debate. From the available evidence, our expectation is that many countries will find their projected allocation of Amount A from the MNEs in its scope to be insufficient. The narrower the scope of the proscription of alternative measures, the more likely it would be that countries would join the MLC, although its complexity will also be a deterrent, especially for low capacity countries.

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