The U.N. Digital Tax Article 12B
The UN Tax Committee approved insertion of article 12B and its Commentary into the 2021 United Nations Model Tax Convention. Unlike in the OECD-led work on Pillar One, the taxing right is not conditioned on revenue thresholds and only applies to companies engaged in the digital economy, so-called automated digital service companies. The new taxing right would apply to income from automated services such as the supply of user data, platform services, online search engines, and cloud computing services. The model treaty provisions allow source countries to apply a withholding tax on gross payments or companies can elect for the withheld amount to be based on profits earned in the source country. Mr. Lennard, who serves as Secretary of the UN Tax Committee, will give insights into the process that led to the UN Model changes and their implications in light of Pillar One.
American Bar Association
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