Updates on BEPS 2.0 project from OECD Tax Talks and G20 Finance Ministers meeting

Executive summary

On 21 February 2022, the Organisation for Economic Co-operation and Development (OECD) held a Tax Talks webcast during which members of the OECD Secretariat provided an overview of the latest international tax developments, including updates on Pillars One and Two of the so-called Base Erosion and Profit Shifting (BEPS) 2.0 project. The BEPS 2.0 project was also addressed in the OECD's Secretary-General Report (pdf) to G20 Finance Ministers and in the communiqué (pdf) from the 17-18 February 2022 G20 Finance Ministers and Central Bank Governors meeting.

The Tax Talks included discussion of the ongoing public consultation process for Pillar One, providing reaction to the feedback received on the design of revenue sourcing rules and information on the upcoming consultation documents on Amount A and Amount B. It also included an update on the ongoing work to finalize the Commentary to the Model Rules on Pillar Two and the planned public consultations on the implementation framework and the Subject-To-Tax Rule (STTR) model provisions and the STTR Multilateral Instrument.

The G20 Finance Ministers meeting communiqué reiterates the G20’s commitment to swift implementation of the two-pillar package. It calls for finalization and consistent implementation of the Pillar Two Model Rules at a global level as a common approach. It also welcomes the ongoing development of the Multilateral Convention for Pillar One.

Detailed discussion

OECD Tax Talks

On 21 February 2022, the OECD hosted its 19th Tax Talks webcast, with the following topics on the agenda:

  • General update
  • Update on Pillar One
  • Update on Pillar Two
  • Other workstreams
General update

The OECD Secretariat speakers provided a summary of developments since the last Tax Talks webcast in March 2021,1 highlighting the July2 and October3 agreements on the BEPS 2.0 project and the release of the Pillar Two Global Anti-Base Erosion (GloBE) Model Rules in December 2021. They noted that several jurisdictions have taken action since the release of the Pillar Two Model Rules, citing as examples the European Commission’s release of a proposed directive for the implementation of the GloBE rules;4 the United Kingdom’s launch of a public consultation on implementation; Switzerland’s5 confirmation that it intends to introduce the rules and the announcement by the United Arab Emirates6 regarding plans for a corporate income tax regime that will accommodate implementation of the minimum taxation rules.

Update on Pillar One

The OECD Secretariat speakers indicated that the OECD/G20 Inclusive Framework on BEPS is continuing to work on Pillar One under the timelines reflected in the October 2021 agreement. In addition, as announced in December 2021, the OECD has begun a series of public consultations on working documents on each Amount A building blocks. The first working document released focuses on nexus and revenue sourcing,7 and comments have already been submitted on this document. The second working document focuses on tax base determination rules.8 Looking ahead, the speakers indicated that working drafts will be released for public consultation covering the following additional topics related to Amount A:

  • Scope test
  • Exclusions - extractives
  • Exclusions – regulated financial services
  • Tax certainty for Amount A
  • Tax certainty for issues related to Amount A
  • Elimination of double taxation
  • Marketing and distribution profits safe harbor
  • Withholding taxes
  • Administration
  • Segmentation
  • Unilateral measures

There also will be a public consultation on Amount B.

With respect to the consultation on nexus and revenue sourcing, the speakers indicated that the OECD received 63 submissions amounting to almost 400 pages of comments from interested parties. They noted that the OECD has identified four main themes in the comment submissions:

  • On the transaction-by-transaction approach, it is critical not only to find the right market jurisdiction, but also to source the right amount of revenue. Further, compliance should be assessed at a systems level and not at an individual transaction level.
  • On the “reasonable indicator” test, certainty on the process should be provided given the subjectivity of the test, and the challenges of obtaining new information, in particular for B2B9 services, should be taken into account.
  • On simplicity, expansion of the de minimis amount with respect to transactions or a de minimis amount of revenue are important and additional guidance should be provided to avoid complex categorizations (e.g., clarifying the difference between finished good and component).
  • On the certainty process, there is significant interest in advance certainty, including advance confirmation of the approach to revenue sourcing and that the right data is being used, as well as the introduction of a soft-landing approach that takes into account experience during the initial phase of operation of these rules.

As to Amount B of Pillar One, the speakers indicated that the intention is to streamline and simplify the application of the arm’s-length principle to marketing and distribution activities with a particular focus on the needs of low-capacity jurisdictions. The work in this area is currently focused on defining and pricing baseline marketing and distribution activities. The OECD expects to release a public consultation on Amount B by mid-2022 with a view to finalizing it by the end of 2022.

Pillar Two update

The OECD speakers indicated that the OECD and the Inclusive Framework are in the process of finalizing the Commentary on the Model Rules on Pillar Two. They noted that the Commentary will include a reference to the co-existence of the Model Rules with the Global Intangible Low-Taxed Income (GILTI) rules in the United States. In addition, the speakers referenced plans to release a public consultation document on the GloBE implementation framework in February or March 2022, which will request input on matters related to implementation of the GloBE rules, including filing obligations, standardization and safe harbors. They stated that the aim is to finalize the implementation framework by the end of 2022.

The speakers also discussed four workstreams related to the STTR under Pillar Two. There are plans to release public consultation documents on the STTR model treaty provision and related commentary as well as on the Multilateral Instrument that would modify relevant tax treaties to implement the STTR. In addition, the OECD is working on a process to assist jurisdictions in implementing the STTR.

Other workstreams

At the end of the webcast, the OECD speakers very briefly discussed other tax-related OECD workstreams. They noted the work undertaken by the OECD/United Nations Development Programme (UNDP) Tax Inspectors Without Borders (TIWB), which they described as having now deployed more than 100 programs and raised significant revenues for developing countries. They also noted the latest work on tax transparency, which includes a new crypto-asset reporting framework and amendments to the Common Reporting Standard (CRS) that will be released soon for public consultation. Finally, while not addressed by the speakers due to time constraints, the slides (pdf) used for the webcast provide summary information regarding the OECD’s work on carbon pricing, including reference to inclusive initiative on climate measures that would involve a multilateral vehicle to share data and information.

OECD Secretary-General report

On 9 February 2022, the OECD Secretary-General delivered a tax report to the G20 Finance Ministers and Central Bank Governors ahead of their 17-18 February meeting under the 2022 Indonesian Presidency. This report addresses the BEPS 2.0 project, the work on explicit and implicit carbon pricing, tax policy and gender equality, tax and development, tax transparency and the BEPS minimum standards.

On BEPS 2.0, the report provides a summary of the developments that were discussed in more detail on the Tax Talks webcast. On carbon pricing, the report proposes the launch of an Inclusive Framework-like initiative to facilitate dialogue on implicit and explicit carbon pricing. The aim of this initiative is to bring jurisdictions together to develop a transparent measurement framework to support the comparison of key climate mitigation policies and their effects. The report notes the data the OECD currently produces on effective carbon rates and expresses the view that going forward further analysis will be needed in order to capture the full array of policy instruments adopted by countries to reduce emissions.

On tax policy and gender equality, the report refers to the recently published OECD report on Tax Policy and Gender Equality: A stocktake of country approaches, which provides a cross-country overview of governments' approaches to tax policy and gender. On tax and development, the report notes the steep learning curve on BEPS 2.0 for many developing countries. It further indicates that the OECD is preparing a roadmap to track progress made by developing countries on international tax reform and address further priorities identified by developing countries, including the impact on tax incentives for investment. Further, bespoke technical assistance is being rolled out to ensure that the needs of lower capacity members of the Inclusive Framework are met in the implementation phase of the Two-Pillar agreement. This is in addition to ongoing capacity building work, including over 100 programs being carried out through the OECD/UNDP TIWB initiative. Also, over 70 jurisdictions have now implemented a value added tax reform based on the OECD standard.

On tax transparency, the report indicates that a new tax transparency package consisting of a new crypto-assets reporting framework and a proposed revision of the Common Reporting Standard will be released soon for public consultation. In relation to the Global Forum on transparency and exchange of information for tax purposes, there are now 163 jurisdictions members, 144 signatories of the multilateral Mutual Assistance Convention, and over 7,700 exchange relationships in place. Moreover, 120 jurisdictions have committed to automatic exchange of information (AEOI) by 2024 and progress on transparency and exchange of information has helped identify approximately €112 billion in additional revenue to date.

Finally, the report provides an update on the ongoing activity with respect to the BEPS minimum standards on the taxation of multinationals:

  • BEPS Action 5 (harmful tax practices): 131 Inclusive Framework jurisdictions have been subject to peer reviews on the exchange of tax rulings, as a result of which 95 jurisdictions have been found to be in full compliance with the standard and 36 jurisdictions have received recommendations for improving their legal or operational framework on exchange of tax rulings.10
  • BEPS Action 6 (treaty abuse): The Inclusive Framework has approved a peer review report, which has not been published yet, that shows that the level of compliance with the minimum standard on treaty shopping has more than doubled since last year, with about 2,300 of the 2,400 tax treaties concluded between Inclusive Framework jurisdictions expected to become compliant with the minimum standard in the near future.
  • BEPS Action 13 (transfer pricing documentation): The peer review results released in October 2021 on the implementation of the country-by-country reporting (CbCR) minimum standard show that over 100 Inclusive Framework jurisdictions have introduced CbCR legislation to impose a filing obligation.11
  • BEPS Action 14 (dispute resolution): The OECD has released updated statistics on Mutual Agreement Procedures (MAP)12 and the Stage 2 peer review reports on implementation of the minimum standard for MAP for the seventh13 and eighth14 batches of jurisdictions.

In addition, the report notes that the coverage of the BEPS Multilateral Instrument has expanded to 99 jurisdictions and about 1,850 bilateral tax treaties. Finally, the OECD released the latest version of the OECD Transfer Pricing Guidelines in January 2021.15

G20 communiqué

The communiqué issued at the conclusion of the G20 Finance Ministers and Central Bank Governors meeting on 17-18 February includes the following paragraph on tax matters:

To ensure the swift global implementation of the historic OECD/G20 two-pillar international tax package agreed in 2021, we commit to develop the model rules and multilateral instruments according to the timetable provided in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023. We welcome the technical design of the Global anti-base erosion Model Rules for Pillar 2 adopted by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), and call for their finalization and consistent implementation at a global level as a common approach. We also welcome the ongoing development of the Multilateral Convention for Pillar 1. Bespoke technical assistance will be available to developing countries to support all aspects of implementation. We support the global and regional efforts, including in the Asia-Pacific region, to improve domestic resource mobilization in developing countries through technical assistance and capacity building and welcome the G20 Ministerial Symposium to discuss these issues. We support the progress made on the work on the framework for the automatic exchange of information on crypto-assets. We acknowledge the OECD/G20 Inclusive Framework on BEPS report on Tax Policy and Gender Equality.

In addition, with respect to taxation and climate, the communiqué states:

We reiterate our commitment to tackle global challenges such as climate change and environmental protection including biodiversity loss. In the context of strengthening global efforts to reach the goals of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, as well as implementing our COP26 commitments, our policy mix toward carbon neutrality and net zero should include a full range of fiscal, market and regulatory mechanisms including, if appropriate, the use of carbon pricing mechanisms and incentives, and phase out and rationalize, over the medium term, inefficient fossil fuel subsidies that encourage wasteful consumption and commit to achieve this objective, while providing targeted support to the poorest and most vulnerable, and in line with national circumstances.

The communiqué also includes an annex with further actions, including the following action items related to international tax:

  • We ask the OECD as a top priority to explore further the recommendations of the report on developing countries and the OECD/G20 Inclusive Framework on BEPS to identify possible areas where domestic resource mobilization efforts could be further supported, including in the Asia-Pacific region and in collaboration with the Asian Development Bank’s Asia-Pacific Tax Hub.
  • We ask the OECD to complete the work on a reporting framework for automatic exchange of information on crypto-assets, with a view to improve tax compliance.
  • We look forward to the OECD work on the tax policy implications of gender equality.

Finally, the communiqué includes further actions related to tax climate change:

  • We will continue our efforts at dialogue informed by, and where appropriate, relevant expert international technical work, without prejudice to our own domestic and existing international processes.


The OECD Tax Talks webcast and the OECD Secretary-General report to the G20 Finance Ministers each provide high-level updates on the tax-related workstreams of the OECD. Both summaries show that there is still significant work to be done in the Inclusive Framework to flesh out the technical details and address the remaining open issues with respect to both pillars of the BEPS 2.0 project, while also reflecting the continued intention to meet the agreed implementation timelines for the two pillars which would have new rules in effect as of January 2023.

It is important for businesses to follow the developments with respect to the BEPS 2.0 project as they unfold, including evaluating the potential impact of the proposed rules on their organization and considering what steps may need to be taken to prepare for the compliance obligations associated with the proposed rules. In addition, businesses may want to take opportunity to participate in the consultation processes to engage with policymakers on the practical implications of the rules being developed.

Businesses also should monitor global developments with respect to tax policy and climate change, including activity in the OECD, the G20 and the European Union.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, Rotterdam
  • Ronald van den Brekel
  • Marlies de Ruiter 
  • Maikel Evers 
Ernst & Young Belastingadviseurs LLP, Amsterdam
  • David Corredor Velasquez 
  • Roberto Aviles Gutierrez 
Ernst & Young Limited (New Zealand), Auckland
  • Matt Andrew 
Ernst & Young LLP (United States), Global Tax Desk Network, New York
  • Jose A. (Jano) Bustos 
Ernst & Young LLP (United States), Washington, DC
  • Barbara M. Angus

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.