Base Erosion and Profit Sharing (“BEPS) 2.0”
Circular Ref: A(20)198
Issue Date: 27 Oct 2020
Earlier, we wrote to you inviting you to join a focus-group meeting chaired by the Secretary for Financial Services and the Treasury with the maritime and aviation sectors to discuss the "BEPS 2.0”, concerning the digital tax proposals of the Organisation for Economic Co-operation and Development (OECD).
The Association, represented by the secretariat and several members, attended the meeting on 23 October.
Please find attached (again) the fact sheet prepared by our government earlier, and the powerpoint presentation, with some updated information, given by our government on 23 October.
Briefly, the OECD proposals aim to reach a consensus-based, long-term solution to the tax challenges arising from the digitalisation of the global economy. The Pillar One scheme of the OECD proposals would assign taxing rights to every country in the world where a company has customers. The Pillar Two scheme of the proposals would ensure that a minimum level of tax is paid on profits of a multinational group of companies. (The core component of the framework is that parent companies in the scope of Pillar Two would be required to pay a so-called “top-up tax” to its headquarters jurisdictions, in respect to a foreign subsidiary’s profits, if the subsidiary is not subject to a still to be agreed ‘minimum level of tax’.)
We are pleased to learn that shipping is now exempted from the Pillar One scheme. We will continue to support the efforts of the global shipping community to seek exemption of shipping also from the Pillar Two scheme, as the targets of the scheme should be companies operating in sectors (not shipping) that do not have a global consensus on allocation of taxation rights.
Should you have any queries or particular views on the subject, please contact either our Captain Gautam Ramaswamy or myself.
Thank you for your attention.