Repurposing Pillar One into An Incremental Global Tax for Sustainability: Some Blue Sky Thinking in the Midst of Global Crisis

33 Pages Posted: 11 May 2021

See all articles by Jinyan Li

Jinyan Li

York University - Osgoode Hall Law School

Sophie Chatel

Government of Canada - Department of Finance Canada

Date Written: May 2021

Abstract

In this article, the authors make a case for repurposing the OECD Pillar One from a mechanism for reallocating taxing rights to a global tax on the largest and most profitable MNEs’ market-based profits. Such global tax would have the hybrid features of a net-basis corporate income tax and a turnover-basis digital services tax through a conversion formula that ensures a low-rate DST on sales can replicate a higher rate CIT on a country’s share of the profit determined using under the formulary allocation method. More importantly, the authors instill a common purpose of the international tax consensus – to help finance spending on achieving the UN Sustainable Development Goals and targets committed in the Paris Agreement. They also argue that the repurposed Pillar One would be a win, win, win proposition for governments, MNEs and the Planet.

Suggested Citation

Li, Jinyan and Chatel, Sophie, Repurposing Pillar One into An Incremental Global Tax for Sustainability: Some Blue Sky Thinking in the Midst of Global Crisis (May 2021). Osgoode Legal Studies Research Paper, Available at SSRN: https://ssrn.com/abstract=3843097 or http://dx.doi.org/10.2139/ssrn.3843097

Jinyan Li (Contact Author)

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-5025 (Phone)

Sophie Chatel

Government of Canada - Department of Finance Canada ( email )

Esplanade Laurier, 18th floor, East Tower
Ottawa, Ontario K1A 0G5
Canada

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