A Pillar One Design Proposal : Leveraging Pillar Two
An important question facing the OECD/G20 Inclusive Framework Pillars Project is whether a design for Pillar One can be agreed which is capable of implementation in the United States. This working paper outlines a design proposal for (a) imposing the Amount A Tax Liability in market jurisdiction and (b) identifying the ceding jurisdiction (the jurisdiction giving up taxing rights) to avoid double taxation. It operates by leveraging the Pillar Two top-up tax infrastructure (the IIR and UTPR) as well as using the concepts of Excess Profit and Effective Tax Rate which have already been agreed by the Inclusive Framework.The proposal is designed so that it has reasonable prospects of achieving bipartisan consensus because it is unlikely to reallocate profit from the United States. However, even in the absence of U.S. Senate ratification, the proposal is capable of adoption by the United States through domestic legislation (that is, without amending US tax treaties). Furthermore, the author argues that the proposal would be capable of operating on an interim basis even prior to the passing of US domestic legislation (albeit in a non-ideal form)