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THE OECD WORK PROGRAM
PART 1
The Work Program emphasizes the recognition that if the Inclusive Framework does not deliver a comprehensive consensus-based solution within the agreed G-20 time frame, there is a risk that more jurisdictions will adopt uncoordinated unilateral tax measures.
On May 31, 2019, the OECD issued the Program of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalization of the Economy ("Work Program"). The Work Program is the proposal resulting from the four following OECD/G20 Base Erosion and Profit Shifting (BEPS) reports:
1 The 2015 BEPS Action 1 Report: "Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report," OECD/G20 Base Erosion and Profit Shifting Project ("Action 1 Report").
2 The March 2018 Report, "Tax Challenges Arising from Digitalization: Interim Report 2018," Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, working through its Task Force on the Digital Economy (TFDE) ("March 2018 Interim Report"). 3 The January 23, 2019 "Policy Note Addressing the Tax Challenges of the Digitalization of the Economy as Approved by the Inclusive Framework on BEPS on 23 January 2019" ("January 2019 Policy Note").
4 The OECD Public Consultation Document, "Addressing the Tax Challenges of the Digitalization of the Economy, 13 February - 1 March 2019" ("Public Consultation Document").
These reports and the Work Program are based on the pervasive digitalization of the economy: "The Action 1 Report found that the whole economy was digitalizing and, as a result, it would be difficult, if not impossible, to ring-fence the digital economy/'Vhis is consistent with (and derived from) the U.S. Government position that U.S.based digital companies should not be singled out for special tax treatment, especially by European countries.
Issues of significant remote access to the market jurisdiction without taxable presence arose before electronic commerce and the digitalization of the economy. Remote sellers of tangible products had opened markets in other jurisdictions by distributing cross-border by mail, mail order product catalogues. And the consumer in the market jurisdiction could use that mail order product catalogue to order products from the foreign (out of state) seller. The remote seller would deliver those products cross-border, without the remote seller being subject to tax in the market jurisdiction.
Challenges