市民法科学ジャーナル

抽象的な

The New OECD Nexus Rule or a Fox in Sheep?s Clothing: A Critique of Revenue Threshold

Zinhle Novazi

In October 2021, the OECD published its ‘Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the economy’. The Pillar One proposal aims to re-allocate profits of the largest most profitable multinational enterprises (‘MNE’) to jurisdictions where the customers and users of those MNEs are located. This dissertation aims to evaluate whether the OECD’s Pillar One proposal of a new nexus based on a revenue threshold adequately addresses the tax challenges of the digital economy in relation to the profits generated by non-resident companies in a foreign market jurisdiction. The dissertation evaluates the effectiveness of using a revenue threshold as a proxy for significant and sustained engagement by a MNE in the absence of a qualified level of physical presence. This dissertation argues that the OECD’s move towards a new nexus based on a revenue threshold is an anti-climax when considered in light of the OECD’s ‘Tax Challenges Arising from Digitalisation - Report on Pillar One’. Pillar One’s Amount A represents a move away from addressing the challenges of the digital economy by making the taxation of MNEs the singular focus of the project and will disproportionately affect developing economies as well as the rest of the digital economy that falls outside of the scope of Pillar One. In light of the aforementioned, this dissertation will also argue that the OECD has failed to address practical enforcement challenges relating to the application of a revenue threshold especially in relation to tax administration, compliance with privacy regulations and technological capabilities needed by developing countries.