The UN has inserted a new Article 12B in the UN Model for taxation of automated digital services, whereas, the OECD is at the brink of providing a solution based on consensus of its 139 member strong Inclusive Framework through a two pillar approach and has released blueprints on Pillar I and Pillar II. There are substantial differences in the recommendations of the UN under Article 12B and the OECD under Pillar I and Pillar II. Article 12B of the UN Model broadly corresponds to OECD Pillar I (Amount A).
Article 12B in the UN Model is viewed as work of 25 committee members, though revenue officials, but working in their individual capacity. As against this, OECD’s recommendations on Pillar I and Pillar II are seen as participation in the Inclusive Framework of 139 government officials. Going forward, as and when the Inclusive Framework succeeds in achieving the desired consensus and technical solutions on Pillar I, it is a certainty that these 139 countries would not be adopting Article 12B.
In this light, for UN tax proposals to see light of the day, it is expedient that first of all, the status of the existing UN Tax Committee may be upgraded to that of an intergovernmental committee. Also, the numerical strength of the UN Tax Committee needs to be increased so that at the policy making level itself more and more countries participate which shall ensure that the implementation of new provisions gets efficacious. In addition, the strength of the UN Secretariat for tax purposes may be substantially increased and upgraded.
In order to have deeper understanding of the issue, please refer to my article published on MNE Tax on 4th May, 2021 titled 'UN versus OECD – It’s time for the UN to get going' which is available at the following link: