Groundbreaking tax deal for the digital age – How soon will this become reality?

As Deloitte has already communicated, the G20/OECD Inclusive Framework on BEPS reached a political agreement on October 8, 2021 on key aspects of the two-pillar approach to address the tax challenges arising from the digitalization of the economy. Further details on this agreement can be found here.

The G20/OECD will now continue to develop the framework and are in November 2021 expected to release model legislation that jurisdictions should seek to transpose into local rules. Pillar One and Pillar Two are expected to enter into effect already as of 2023 (although implementation of certain aspects may be delayed, such as the so-called Under-Taxed Payments Rule within Pillar Two).

In a statement published from July 2021, the EU Commission announced that a Directive will be used as method to ensure a consistent implementation of at least certain parts of the two-pillar approach throughout the EU Member States and to ensure that the implementation is compatible with existing EU legislation. This will be the case at least for Pillar Two but may also become the case for Pillar One. In its statement, the EU Commission announced that such proposals could be expected “swiftly” after the political agreement would be reached within OECD/G20. Although no exact date for such proposals are known, Deloitte has received indications that a proposal for a Pillar Two Directive may be expected before the end of 2021 with a target adoption date early in 2022. A potential Pillar One Directive is expected to be adopted in the third quarter of 2022.

Deloitte Sweden continuously monitors the development and are happy to discuss the impact on your business, as well as the expected timeline, into further detail.