In the coming months, every country will have some important decisions to take in relation to Pillars One and Two, now that the principles are known and detailed implementation discussions are underway.
Whether or not the US will implement either or both Pillars is one key open question. Digital taxation has always been a highly political matter in the US and it appears that is not likely to be resolved soon.
One thing that is clear is that neither Pillar is intended as a wholesale replacement of existing rules. Shifts in the tax base arising out of Pillar One or some other form of digital taxation and through the implementation of Pillar Two will not remove the need to get the group pricing arm’s length if any new rules come into play.
This introduction was first published in the Chambers Global Practice Guide 2022: Corporate Tax.