6) Biden’s Global Corporate Tax Reform and Digital Taxes

Governments around the world argue that digital services companies do not pay a responsible level of taxes, and a number of countries threatened targeted Digital Services Taxes (DST) in 2020. They were largely stymied by Trump Administration trade threats. The Biden Administration dramatically changed the debate by focusing on stopping countries from being tax havens. The change boosted global tax reform efforts and resulted in a massive two-part deal negotiated at OECD. “Pillar One”, initially focused on digital companies, was reworked to cover approximately 100 highly profitable consumer-facing companies and aims to reallocate some of their tax payments to countries based on the location of customers. “Pillar Two” embodies the Biden Administration priority to reduce tax havens by imposing a minimum tax of 15% on multinational companies. Questions still remain on whether tax changes the US needs to make to implement the OECD plan will get through Congress. Finally, the State of Maryland was the vanguard of US States looking to enact their own DSTs, and their state digital advertising tax goes into effect in 2022 unless a federal court puts it on hold to resolve a range of legal challenges.