On the Ground with International Tax Reform: It’s Time to Start Thinking About How the OECD Two Pillar Solution Could Affect Your Business

Abstract

The world is increasingly interconnected, but interconnectedness does not mean free of obstacles. A container ship snared in the sandy bottom of the Suez Canal can disrupt the availability of clothing, electronics, and heavy machinery on the other side of the world. As the Suez saga unfolded the world watched, captivated by the sensational nature of the story, the disruption it was causing, and how unlikely such an event seemed to be. Technological advancements in transportation and communication have largely conquered the traditional physical obstacles to trade. Rugged mountain passes, rough seas, and vast distances are no longer the impediments they once were. Instead, the most onerous obstacles facing modern commerce are human creations—the quagmire of rules and regulations that inundate every industry in every corner of the world. The Port of Los Angeles container ship bottleneck is one current example. A local zoning ordinance restricting (for aesthetic reasons) the stacking height of empty containers was cited as contributing to the congestion. Local officials suspended enforcement to hopefully alleviate pressure at the port. Now, more than any prior time in human history, we are our own greatest obstacle. In a landscape of self-inflicted complexity, international tax is a particularly treacherous path, and there is no excavator large enough or tugboat powerful enough to painlessly free an unwary enterprise grounded on the uncompromising banks of an international tax dilemma. Changes to these rules are on the horizon, and taxpayers need to be prepared.