A U.S. proposal that would let companies opt out of part of the OECD’s global tax overhaul will be set aside through at least January, a Treasury official said.
Earlier this month U.S. Treasury Secretary Steven Mnuchin urged the OECD to include an optional safe harbor that would allow companies to opt out of Pillar One of the plan. Pillar One would change some of the tax rules and agreements that determine when a company is taxable in a country and how much tax it pays there.
A discussion about the safe harbor proposal won’t be a condition for U.S. participation in an OECD meeting in January on the plan, Lafayette “Chip” Harter, deputy assistant secretary for international tax affairs at the Treasury Department, told reporters Dec. 19.
The Organization for Economic Cooperation and Development had warned the U.S. that the safe harbor proposal could delay the organization’s effort to get nearly 140 countries to agree to a plan. The OECD is trying to address concerns that multinational companies, especially the big tech industry, aren’t paying enough in taxes or in the right countries.
The U.S. will make a decision on whether it wants Pillar One to apply on a mandatory or safe harbor basis once the pillar’s design becomes clearer, Harter said. He was speaking at a tax conference hosted by George Washington University and the IRS.
The OECD will likely release three papers based on discussions from the January meeting, likely in February, said Pascal Saint-Amans, director of the OECD’s Center for Tax Policy and Administration.
One paper will explain where negotiations stand overall, a second will outline the architecture of Pillar One, and a third will provide updates on the work on Pillar Two’s global minimum tax and anti-abuse rules.