Great to see both @IMFNews & @WorldBank staff showing support for UN tax committee proposed changes to model convention to tax automated digital businesses (Article 12b) which will be finalised in April @NavidHanif_UN 1/n

WB states that " The introduction of DSTs also recognises concerns about the ability of developing economies to engage with an internationally developed multilateral regime that looks very complex
and that may do little to increase their tax revenue "& 2/n

"The development of a treaty article such as Article 12B will be in line with the policy rationale of jurisdictions wishing to use more straightforward domestic rules to exercise taxing rights over income generated in their economies" 3/n

Support from @imf is even stronger "We consider that the proposed approach better preserves the taxing rights of developing countries and does so in a simpler way
than the existing @OECDtax Inclusive Framework (IF) proposals.. 4/n

by permitting withholding on gross payments with respect to ADS while also containing an optional mechanism for net basis
taxation" 5/n

. @IMFNews adds that they "generally prefer more principled and broader based reforms (e.g., more comprehensive residual profit schemes and a stronger element of destination-basing through a proportionately greater allocation of taxing rights to market jurisdictions)" 6/n

This is interesting, as Article 12b suggests the profit allocation using net method should be "30 percent of the amount resulting from applying the beneficial owner’s profitability ratio to the gross annual revenue from automated digital services" 7/n

Article 12b proposal has strong support from the UN tax committee members from the Global South, who happen to be the majority, and was opposed by most countries in the Global North, but is one member one vote.. 8/n

What this shows is that there is expectation that a fair allocation of taxing rights to market jurisdictions should be c30% of the global profits, and this mirrors what G-24 member states are negotiating for as part of the @OECDtax Inclusive Framework negotiations. 9/n

It remains to be seen whether Article 12b take up will be high, as @IMFNews points out that "its real-world success will depend on the negotiated take-up by bilateral treaty partners in new tax treaties, as well the ability to facilitate modifications to existing ones" 10/n

But it will certainly put pressure @OECDtax to deliver an alternative that countries in the Global South will consider meaningful (aka revenue). Watch this space as the story unfold in 2021......11/n

IMF and WB submissions can be found here https://www.un.org/development/desa/financing/documents