Addressing the Challenges of Digitalization of the Economy


The members of the Inclusive Framework have identified the challenges with the existing profit allocation and nexus rules. Three proposals are being examined by the Inclusive Framework to address such challenges. These proposals would require fundamental changes to both the profit allocation and nexus rules and expand the taxing rights of user and market jurisdictions. These proposals have important differences, including the justifications put forward for the reallocation of taxing rights, and the businesses for which that change in profit allocation would be relevant. 


The proposals recognize the value created by a business' activity or participation in user or market jurisdictions that is not recognized in the current framework for profit allocations. The above proposals are as below:

  • the user participation proposal;
  • the market intangibles proposal; and
  • the significant economic presence proposal.


See more information from the OECD Public Consultation Document. [read]


OECD BEPS action 1 documents: