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Compliance Challenges of the BEPS Two-Pillar Solution

Noonan and Plekhanova in this paper address the Two Pillar approach as a response to the tax challenges of the digital economy. The authors note specifically that the two-pillar solution is a complex package which foresees new binding and non-binding international instruments, amendments to hundreds of existing tax treaties, and enactment of new national tax laws. In view of concerns about the implementation, coherence, and fairness of the rules of the two-pillar solution, this article suggests that a fuller understanding of the likely impact of the two pillar solution requires looking beyond the four walls of the TPS documentation. The writers argue that following an evaluation of the likely impact, and a contemplation of the legal basis of the components for implementation of the Two Pillar Solution, the enthusiasm of states to endorse the October 2021 Statement on the Two Pillar Solution may not carry through to its implementation and compliance. The authors opine that there are reasons to doubt both broad and high levels of implementation and compliance and ultimately the sustainability of the Two Pillar Solution in the longer-term.

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Chris Noonan and Victoria Plekhanova

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