The digital economy: OECD’s consultation on tax challenges

This briefing paper reviews the OECD’s March 2014 consultation to address the tax challenges of the digital economy.


The debate which led to the Organisation for Economic Co-operation and Development’s (OECD’s) base erosion and profit shifting (BEPS) project work was kicked off by a letter to the Financial Times (FT) by the UK, German and French finance ministers. The three Ministers promised to take the lead in bringing the global tax rules into the twenty-first century for companies and tax jurisdictions, working through the OECD to achieve this.

As highlighted in a responding letter in the FT by ACCA, it was not clear that the proposals would lead to more than merely a shuffling of the deckchairs among the highly developed economies. Achieving real change will be elusive if no advanced economy is willing to give up a part of their tax take to one of the BRICs or any other less developed country.

Nevertheless, the OECD accepted the gauntlet and took forward the work programme, which it published in the middle of 2013. In its 15-point plan. The time lines for achieving finalisation of each work stream is extremely tight. The first deadlines are for September this year followed by successive deadlines finishing at the end of 2015 and final implementation for all measures in 2016.
One suspects the clock might be stopped in 2015 to allow more time for the action points to be finalised.