11 March 2019

Insurance Europe: Insurers warn OECD tax proposals for digital business could result in significant legal uncertainty

While welcoming the Organisation for Economic Co-operation and Development’s (OECD) efforts to address taxation challenges that result from digitalisation, Insurance Europe believes that any adaptations should focus on aggressive base erosion and profit shifting (BEPS), rather than on challenging the existing international tax system.

Insurance Europe welcomes the OECD’s efforts to address the taxation challenges that digitalisation brings to the international tax system.  

Insurance Europe believes that any adaptations to digital business models should focus on aggressive base erosion and profit shifting (BEPS) rather than on challenging the existing international tax system as such.  

The OECD’s initial proposals go far beyond the mere taxation of digital business models and would lead to fundamental changes in the existing international tax system. Both pillars of the proposal are too vague at this stage and would therefore result in significant legal uncertainty and increased administrative burdens for taxpayers and tax authorities.  

The innumerable problems resulting from such a profound change to the international tax system have not adequately been considered yet and Insurance Europe believes that this should be done before any legislative action is taken. 

The consultation suggests it is possible that proposals under both Pillar 1 and Pillar 2 be introduced. Insurance Europe does not see how this could be achieved without it resulting in double taxation. 

The various problems and questions listed in this paper are reflective of the complexity of the OECD’s proposals. Due to the early stage of the draft and the related uncertainties, Insurance Europe would appreciate a continuous exchange of ideas between the OECD and interested stakeholders throughout the entire consultative process.

Position paper

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