Taxation of the digital economy
How should digital business models be taxed internationally? The OECD has been working on this question for some time and now developed an approach based on two pillars. By the end of 2020, all OECD member states should agree to the new OECD approach. Thus, companies must prepare now!
In particular the first pillar ("Pillar One") poses major challenges for companies. The concept connects previous proposals for taxing the digital economy creating the so-called "Unified Approach". Among other things, the OECD proposes to redistribute taxation rights in order to tax companies not dependent of their physical presence but market influence. In addition, an examination of the nexus and profit distribution regulations is planned. However, not only highly digitised and automated business models, but also traditional ones are likely to be affected by the planned changes by the OECD. In principle, the approach applies to large, consumer-oriented companies.
Simulate the effects of the OECD Approach - with our tax tool
The PwC Market Taxation Analyzer helps your company simulate the tax effects of the OECD approach. With the tool's help we simulate and quantify the company specific effect of the Pillar One framework including analyzing the change in the distribution of profits in the group and thus on the group tax rate. This allows you to qualitatively assess whether the planned taxation regime will have an advantageous or disadvantageous effect on your tax payment position and if so, how to adapt it. The tool was created in PowerBI and allows you to change various scenarios and assumptions by modifying the interactive dashboard using drop-down menus.
The benefits of our digital solution
The profit distribution within the group will be simulated based on data.
The tax effects under Pillar One are clearly visualized.
The interactive and intuitive dashboard allows you to operate and customize the tool yourself.
How does the tool work?
Excel template fill-in
In order to set up the tool for your company, all you have to do is fill in an Excel template provided by us. This template contains, for example, country-specific revenues or the effective tax rate of your company. Of course, the data is subject to our legal confidentiality obligations.
After we received the template, you will be provided with the online access (for six months and a maximum of three people) to the Market Taxation Analyzer and will be able to run a simulation for your company group with our interactive dashboard.
Discussion of results during virtual meeting
In the course of a one-hour call, we will then guide you through the tool, discuss the effects on your company and clarify any questions you might have. With our analysis we give you a first comprehensive assessment of the effects and challenges of Pillar One for your company group. We would be happy to support you with further analyses under a separate contract.
Assess the impact of the OECD Approach
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