International discussions aimed at overhauling the international corporate tax system will take place this week.

On the agenda on October 8 and 9 is a two-pillar plan developed by Organisation for Economic Cooperation and Development, aimed primarily at finding ways to tax big technology companies.

Pillar one would reallocate some of the profits of multinationals to the countries where they have users or consumers, while pillar two would create a global minimum tax rate.

Bermuda is one of the 137 countries to have participated in the Inclusive Framework on Base Erosion and Profit Shifting. The Royal Gazette reached out to the Bermuda Government to ask whether the island would be represented at this week’s meeting, but we received no response by press time.

One of the attractions of the island as an international business centre is its zero corporate tax rate, an attraction that could potentially be eroded by the new rules.

Pascal Saint-Amans, the head of tax of the OECD, said at a conference in Dublin last year that the purpose of the Beps project was “to kill zero-tax jurisdictions or to make sure companies wouldn’t be able to locate profits in zero-tax jurisdictions, where nothing is happening”.

An end-of-year deadline for a document that all participating countries can agree on is looming large.

While it is possible that this week’s talks could be a large step towards a radical overhaul of the international tax system, a broad-based agreement seems unlikely, according to experts.

Some countries stand to gain and others to lose from the proposals and with political and business interests influencing stances, fundamental differences have emerged.

Jeff VanderWolk, a partner at Squire Patton Boggs (US) LLP in Washington, summed up the entrenched positions he sees in a column for Bloomberg Tax.

Mr VanderWolk wrote: “Fundamentally, the clash is between the US, which has supported the development of its robust technology sector through tax deductions for research and development, and the larger European countries, whose governments are under political pressure to tax the US tech giants, thereby appropriating part of the return on the US’s investment.

“This conflict is unlikely to be resolved, in the short term, in the context of an international tax policy project involving 137 sovereign taxing jurisdictions who are being asked to agree to radically new, and mind-bogglingly complex, methods of taxing multinational business profits.” Among details to sort out are which industries and companies should be subject to the new rules. The US opposes the targeting of only digital businesses and some countries have proposed applying the profit reallocation rules to so-called “consumer-facing businesses”, which could extend to many multinationals outside the tech industry.

Countries still have to determine what the minimum rate will be. And another issue is the US’s existing minimum tax, the global intangible low-taxed income, or Gilti, and how it would coexist with the pillar two minimum tax.

An outline of the technical details agreed for the two pillars is scheduled to be presented at the next meeting of the G20 finance ministers on October 15 and 16.