From Theory to Practice: OECD’s Pillar 1 and Pillar 2 Explained

Description

In recent years, the Organisation for Economic Co-operation and Development ( OECD ) has introduced two groundbreaking pillars aimed at modernizing international taxation frameworks: Pillar 1 and Pillar 2. These reforms address the challenges posed by digitalization and global tax competition, seeking to ensure that multinational enterprises (MNEs) pay their fair share of taxes in jurisdictions where they operate.

Pillar 1 proposes new rules for allocating taxing rights, particularly focusing on highly digitalized businesses. It introduces a concept of nexus based on revenue thresholds, allowing countries to tax profits generated from users or consumers within their borders, regardless of physical presence.

Pillar 2, on the other hand, tackles base erosion and profit shifting (BEPS) by setting a global minimum tax rate to prevent MNEs from shifting profits to low-tax jurisdictions. This pillar aims to create a level playing field and discourage harmful tax practices that erode the tax base of other countries.

This seminar will delve into the detailed provisions of Pillar 1 and Pillar 2, exploring their potential impacts on multinational enterprises. In addition, we will discuss the ways in which tax authorities in Asia have adopted the guidance provided by these Pillars.

Programme Outline

Pillar One:

• Overview and objective of Pillar One
• Pillar One – Amount A
• Effect of Amount A on Asian tax authorities
• Pillar One - Amount B
• What is Amount B
• Practical implications of Amount B

Pillar Two:

• Fundamental Principles of Pillar Two
• The Theory
• Practical guidance to prepare for Pillar Two
• Implementation of Pillar Two in Asia

Key tax / transfer pricing updates in Asia

What you will learn

• Understand the mechanics and nuances for Pillar One and Pillar Two to be able to determine:
• If your organization is impacted by these changes; and
• If you are, how can you prepare for and comply with these changes.
• Understand how tax authorities are reacting to Pillar One and Pillar Two changes, particularly from a tax / transfer pricing audit perspective

Target Audience

• Accounting and Finance Professionals
• Tax Professionals
• Directors and Business Managers

Expert Speaker

Sowmya Varadharajan

Dr. Sowmya Varadharajan is a transfer pricing expert who helps companies to design and document appropriate transfer pricing strategies and approaches for their related party transactions. Having been trained in the U.S. on international tax and transfer pricing issues through blue-chip corporations, Sowmya now applies her transfer pricing training to transfer pricing issues in the Asia Pacific region. Sowmya has extensive experience in the high technology/ semiconductor as well as pharmaceutical/ biomedical industries.

In addition to transfer pricing, Sowmya is also skilled in Intellectual Property (“IP”) valuation. With the growth in transfer pricing related audits in the Asia Pacific region, Dr. Sowmya has assisted clients in India, China, Malaysia, Indonesia, and Singapore in defending their transfer pricing arrangements with tax authorities. Sowmya has authored “Transfer Pricing in Singapore”.

Sowmya is an economist with Ph.D. in Economics from Cornell University and has more than 20 years of transfer pricing consulting experience.