Back to square one?

Global tax deal might unravel after withdrawal of US; India needs to tread with caution

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EARLY A DECADE after the start of a multilaterally coordinated effort to attune the global tax systems to the digitised world of business, and despite a hard-won 2021 agreement among nearly 140 nations to put into effect the requisite new rules, things have come to a pass. The Trump administration has withdrawn from the OECD-brokered global tax deal signed during the Biden regime. To be sure, the much-touted two-pillar tax solution is designed to address the issues arising out of the current global situation, where companies gain market access with minimal or no physical business in the jurisdictions concerned. The global body had taken the G20 nations on board before it made a pioneering move in 2015 to address the tax challenges of the digital economy, under its Base Erosion and Profit Shifting (BEPS) project. That in fact was meant to mark a shift from the century-old approach to international taxation, under a network of bilateral tax treaties, and built around traditional business, relying primarily on physical presenc