Law360 Quotes Elizabeth Stevens on Pillar One and DSTs

Multinational corporations awaiting the outcome of a massive global tax rewrite can likely expect either new profit allocation rules or a patchwork of unilateral measures designed to increase the tax take for market countries — and compliance headaches under each alternative.

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The OECD work is only the first step, said Elizabeth Stevens, a Member of Caplin & Drysdale. Complicated politics in the U.S. and other countries mean it could be a while before there's a critical mass of countries applying the new rules, she said.

"There's still a lot to be done, and that contributes to my skepticism of Pillar One being implemented," she said.

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In a similar vein, Stevens at Caplin & Drysdale said that instead of income taxes, DSTs could be viewed as something akin to value-added taxes or goods and services taxes. These measures aren't creditable because they're not income taxes, but they're business costs that companies can deduct, she said.

Companies would have the same choices about what to do with DSTs as they would with other costs, such as passing it through to their customers or taking a hit to profits, Stevens said.

The measures may seem less worrying, she said, if companies "stop thinking about it as an income tax, and just start thinking about it as something equivalent to a charge for the privilege of doing business in a jurisdiction."

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