In what some see as evidence of a more inclusive approach to global tax policy by the Biden administration than its predecessor, the US has agreed to drop the requirement that the OECD Pillar 1 tax proposals be implemented on a 'safe harbor' basis (i.e. affording some MNE's the ability to opt out, and which had led to an impasse on its furtherance).
The Pillar 1 proposals broadly seek to agree new profit allocation and nexus rules for allocation of taxing rights in recognition of the inadequacy of current models given ever increasing digitalisation of the economy. The somewhat related Pillar 2 proposals essentially aim for the net payment of a minimum level of tax.
There is cautious optimism to the US's change of tack materialising into real progress (not least given anticipated challenges in passing tax legislation through both houses of US Congress), but it is generally welcomed as an important breakthrough, hopefully indicating a more constructive and collegiate attitude to addressing global issues.
U.S. Treasury Secretary Janet Yellen told G20 officials that Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, U.S. and European officials said on Friday, raising hopes for an agreement by summer.