This transcript has been edited for length and clarity.

David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: Taking stock at 300.

We're celebrating our 300th episode. So in honor of that milestone, we decided to bring back one of the voices you may have heard many times over the last few years. This will be a chance for listeners to get to know a bit about her as well as the topic that has defined her career here at Tax Notes.

If you'd like to hear our 100th and 200th episodes, you can find links to those in the show notes.

Our guest, Stephanie Soong, has been covering the OECD's efforts to modernize corporate taxation for nearly a decade. Today she's here to tell us a bit about herself, how we got where we are at the OECD, and how things are going now.

So without further ado, I'm joined now by Tax Notes chief correspondent Stephanie Soong. Stephanie, welcome back to the podcast.

Stephanie Soong: Hey, great to be here, and I'm very honored I'm the 300th episode.

David D. Stewart: Yeah, well, I'm so glad that you were able to join us. Could you start off maybe by telling listeners a bit about yourself, how you got here?

Stephanie Soong: Well, I started working at Tax Analysts in 2011, and before that I was just basically floating around. I was kind of just casting about for my next big thing. I was freelancing for various trade publications like Meatingplace Magazine, which is for the meat industry. That's M-E-A-T. I worked at a column in that publication, which was kind of fun.

David D. Stewart: What sort of things did you write for a meat publication?

Stephanie Soong: Oh, yeah. So I had this column called Category Profile, and so I would take a category of meat and just talk about the meat trends and sales numbers and new products. And yeah, it was interesting. Occasionally I'd do a story about plant safety, so a far cry from what we're doing now.

I also actually had a very short stint in — well, not a really short stint — it was about six years in fashion, actually. I was a fashion editor for about six years, doing freelance for Chicago Magazine. So [I] did a lot of fashion shoots, pulled a lot of samples, handling very expensive merchandise which I could never afford. I kind of did a whole lot of different things.

Oh, I also had a short stint as a content moderator for legacy.com, which is like Facebook for the deceased. I had a lot of things going on, but Tax Notes was what stuck.

David D. Stewart: Tell me about how things were when you started out here. What was it like going from meat and fashion to reporting about tax?

Stephanie Soong: It was unexpected. When I got the call for an interview, I actually thought about maybe declining because I did not think that tax was very interesting at the time, if I'm going to be really honest with you. But I ended up going to the interview anyway and just thought that everybody was so nice and the company seemed like it had a really good mission and sounded like I could grow here. So I went, and I'm glad I did.

When I first got here, I really did not know what I was doing, if I'm going to be real. But I did have journalism training, so that helped a lot in trying to write tax news. And so I actually relied a lot on my colleagues.

My colleagues helped me a lot to help me understand the basics of tax, and you just basically just learn by doing. You kind of get thrown into the deep end and you just sort of sink or swim. And luckily I swam, and I'm still swimming.

David D. Stewart: What is it like to look back and think, not that many years ago, you knew nothing of tax and suddenly you are one of our most knowledgeable reporters?

Stephanie Soong: It feels like I'm some kind of superhero. People kind of think it's kind of boring, but I actually feel like a superhero because I kind of know something cool that other people are interested in and care about.

And I feel a little more confident in myself, I guess, as far as my skills, knowledge, my ability to comprehend very complex things. It's really taught me a lot about tax and also myself.

David D. Stewart: Every once in a while I kind of look back and I imagine what fifteen-year-old me would think of what I ended up doing. And at some points during the dark times, I have to say I just don't care. Fifteen-year-old me knew nothing.

Stephanie Soong: Yeah, I know. I don't know if my fifteen-year-old self would've really understood what it meant to be what I'm doing now. I guess I think she would've thought, "Hey, that's kind of cool. She gets to travel a lot." I get to travel a lot and I get to meet new people, and I've got friends all over the world now, so it's kind of cool.

David D. Stewart: Well, let's talk about this area that you have been covering for a while now, and it seems to have defined your career — the OECD's various projects to update corporate taxation. So why don't you talk about how those things got started?

Stephanie Soong: Yeah. So actually when I first started out, I was covering the OECD more generally, in addition to their corporate tax policy work, transparency issues, and other hot topics at the time. But this issue started gaining a lot of steam when they first started out on the BEPS project, the base erosion and profit shifting project, which a lot of listeners know about. It was 15 actions to try to overhaul the corporate tax system to kind of tighten up the rules to make it less easy for companies to kind of game the system and aggressively avoid tax.

Might help to just backtrack a little bit. Governments have been wrestling with this problem of how to tax digital activities since the 1990s. The main problem was about how to tax companies that are making money in jurisdictions without [a] traditional permanent establishment or physical presence.

And so the Action 1 report tried to address that, but it really kind of punted on a solution. The only conclusions really they had, or the key conclusions they had, was that the digital economy is increasingly becoming the economy itself, and it's difficult to ring-fence that economy from the rest of the economy for tax purposes.

And then the report sort of said it appeared to be more related to the allocation of taxing rights and nexus issues rather than BEPS issues, and that sort of provided the groundwork for the current project that we're about to talk about here.

David D. Stewart: So tell me a bit about covering this original BEPS 1.0, as no one called it back then. What sort of work were you doing on that?

Stephanie Soong: Well, I was covering a lot of consultations, a lot of webcasts, getting opinions from people who just didn't know what to make of it. It was interesting to follow because each action was kind of difficult in its own way. I learned a lot in a relatively short period of time.

And it was kind of cool because after the reports came out in October 2015, I was able to go to Lima, Peru, for the G20 Finance Ministers Meeting where they endorsed the reports, which was really interesting. I had never been to a G20 meeting before. It was really cool seeing all these people I covered on a daily basis just walking around.

I got to the venue for the press conference and a bunch of G20 finance ministers wanted to talk about the BEPS project, and more and more ministers wanted to speak. But the stage was only built for only so many ministers, so they had to rebuild the entire stage overnight. And they actually had to create a ramp because one of the finance ministers, the German finance minister, was in a wheelchair. So it was kind of cool to see this kind of scrambling around and trying to prepare for this key moment. It felt like it was part of history.

David D. Stewart: So I guess moving on from the BEPS project to what we're still wrestling with today, why don't you start us off with just a quick rundown of what the two pillars are. I know people have heard this before, but for any listeners that need that refresher, could you tell us about the two pillars?

Stephanie Soong: OK, yeah. So I just want to give a little bit of background to the lead up to the two pillars. So the Action 1 report sort of left it to 2020. We'll work on [it in] 2020. But the German G20 presidency directed the OECD in March 2017 to come up with an interim report following up on Action 1. And they wanted it by March 2018 because they said that the Action 1 work couldn't wait until 2020.

Work really started on the multilateral solution, and that evolved into the two-pillar work plan which countries endorsed in January 2020. And then there was a political agreement in October 2021 on the two pillars.

So let me just tell you what the two pillars are. I've written about this so much that I almost can say it in my sleep. Pillar 1's components are amount A, a taxing right for market jurisdictions over some of the residual profits that the very largest, most profitable MNEs [multinational enterprises] make even without permanent establishment.

Amount A requires a multilateral convention to work, because it's about the allocation of taxing rights. And that convention requires countries to withdraw their digital services taxes and other unilateral measures to tax digital activities, because the idea is that amount A was supposed to replace these unilateral measures that countries were implementing to get at this main problem of taxing companies that are doing business without physical presence. So the countries also agreed on a moratorium on new DSTs [digital services taxes] until the multilateral convention was finalized, and that was set to expire on December 31.

Another component of pillar 1 includes amount B, which would streamline and simplify transfer pricing for baseline marketing and distribution of transactions. And there are also some tax certainty mechanisms baked into pillar 1 as well.

Pillar 2, meanwhile, sets up a minimum taxation framework to make sure that large MNEs pay an effective tax rate of 15 percent no matter where they operate. And they achieve this primarily through the global anti-base-erosion rules, which are also called the GLOBE rules. I always wrestle with that acronym because I'm like, it should be GLABE.

David D. Stewart: It's not a proper acronym. I'm fully on board with you.

Stephanie Soong: GLABE. Anyway, so they're called the GLOBE rules. And so countries can also adopt domestic minimum top-up taxes as long as they produce the same results as the GLOBE rules. So those are the two pillars in a nutshell.

David D. Stewart: I can't help but notice the correlation of dates here with other things going on in the world. How was it covering this project during a time when nobody was really traveling anymore?

Stephanie Soong: Well, I think the wonders of technology, actually. Ironically, the digital activity that we're sort of talking about actually was really key in communicating out what the current thinking was on these two pillars. There were a lot of virtual consultations, virtual press conferences. Everything was virtual, which I think made it hard for the delegates themselves when they're trying to come to some political agreement on these two pillars. But it made it easier for less developed countries, and it made it easier for them to communicate during these meetings. So yeah, I didn't get to travel a lot, but I got to travel a lot virtually.

David D. Stewart: Now, what step followed after the countries came together for the October 2021 agreement?

Stephanie Soong: I should probably note that not everybody in the inclusive framework actually agreed on this. There was a handful of countries that said, "No we can't sign on to this," but the work just continued anyway. So what happened was pillar 2 seemed to be a lot more developed. It was a lot more advanced than pillar 1.

So a lot of countries really focused on pillar 2. The OECD published GLOBE model rules in December 2021 and then the EU actually took a step and published a draft pillar 2 directive, kind of signaling that the EU was on board with pillar 2.

And then there was a bunch of consultations on pillar 1's main features. And the OECD also issued commentary and administrative guidance for pillar 2. And then with that package of pillar 2 stuff, countries started implementing the pillar 2 rules.

David D. Stewart: So where do things stand now?

Stephanie Soong: So in July, the majority of inclusive framework members backed a statement on the OECD's two-pillar plan that confirmed agreement on the draft text of a pillar 1 multilateral convention, and on extending the digital services tax moratorium until December 31, 2024. But that moratorium requires that a minimum of 30 jurisdictions representing at least 60 percent of ultimate parent entities of MNEs in scope of amount A, it requires them to sign the MLC before the end of the year.

So the inclusive framework decided to publish the draft text of the multilateral convention [MLC] in October and then the U.S. Treasury started publicly consulting on the text. So that sort of made people think, "Well, maybe they're not going to be able to sign this pillar 1 multilateral convention by the end of the year as planned because the U.S. was consulting and their consultation doesn't actually end until December 11." So there were questions like, "OK, what does that mean for that DST moratorium?" Because they're facing a precipice of — facing tons of DSTs. So I understand that the U.S. is now working on getting another DST moratorium extension. So that is where things stand with pillar 1.

And the OECD, for pillar 2, pillar 2 is already kind of a reality. A lot of countries have started implementing pillar 2 rules, with a lot of those rules starting on January 1.

So we are facing a whole new world of minimum taxation starting in January, which is going to be interesting. And the OECD meanwhile is also working on a lot of pillar 2 guidance to help companies and to help taxpayers and tax administrations administer these rules. So yeah, that's where we are now.

David D. Stewart: So what is it like covering this phase of these developments? What really occupies your time as you're trying to put together stories?

Stephanie Soong: Keeping track of all these countries and their pillar 2 legislation has been really hard because it seems like almost every day there's something. Some country is either introducing rules, proposing rules, consulting on rules, making some kind of statement on pillar 2. So it's been kind of hard to keep track of everything. So that has been kind of difficult.

Pillar 1, what's interesting about that is it still has a little bit of a political intrigue. Will countries, will they sign or will they not? Are they going to get the texts finalized in time? Are there going to be DSTs springing up everywhere in 2024? It's an interesting time for me.

David D. Stewart: So what is next for the two-pillar project?

Stephanie Soong: Everyone's still waiting to see if the multilateral convention text can be finalized and open for signature by the end of the year. No, maybe not by the end of the year, actually. Probably early next year. I think early next year is sort of the target, tentative target.

Meanwhile, countries are starting to ready their DSTs just in case the multilateral convention doesn't become a thing. Canada already has legislation proposed for a digital services tax to take effect possibly January 1 or at a date of the government's choosing. So we'll see what happens there.

And on pillar 2, the OECD expects to release a bunch of new guidance by the end of the year, including anti-arbitrage rules, because apparently a lot of companies are starting to think of ways to game the pillar 2 rules. So that's kind of interesting. Yeah. So I mean, we're going to see a lot of pillar 2 guidance coming out at the end of the year.

David D. Stewart: Now, I guess my last question is, what's next for you? You've been covering this for so long. These projects are in this implementation phase. Are there subjects in tax that you would like to cover that you haven't had a chance to yet?

Stephanie Soong: Oh, that's a good question. Tax. Well, actually, I think environmental taxation. This is actually my colleague's beat, but I would like to do more on that because it's such a pressing issue. I actually think that they should have probably — this is my personal opinion—it seems that maybe more efforts should be directed at saving the world from climate change. I mean, taxation of sports stars; that'd be kind of fun. Or celebrities; that'd be kind of fun.

David D. Stewart: So you could sort of merge your fashion experience—

Stephanie Soong: Yes.

David D. Stewart: —into tax. Is there a way we can get something in there about meat?

Stephanie Soong: Possibly, because you want to tax the meat industry for producing a lot of carbon emissions, right?

David D. Stewart: There you go.

Stephanie Soong: Or a lot of gas, a lot of, what is it? Methane?

David D. Stewart: Methane. Yeah.

Stephanie Soong: Yeah, methane. The cows. Yeah. Yeah. I mean, why not? The sky's the limit at this point.

David D. Stewart: Well, whatever you choose to do, I'm looking forward to it. Stephanie, thank you for being here.

Stephanie Soong: Thanks for having me again.

David D. Stewart: And now, coming attractions. Each week we highlight new and interesting commentary in our magazines. Joining me now is Acquisitions and Engagement Editor in Chief Paige Jones. Paige, what do you have for us?

Paige Jones: Thanks, Dave. In Tax Notes Federal, Robert Kovacev and Omar Hussein analyze the ability of generative AI to improve efficiency in tax administration and conserve IRS resources. Jeffrey Schwartz explains how the Moore case is about due process.

In Tax Notes State, three Taft Stettinius & Hollister practitioners examine the ultimate destination rule under the Ohio commercial activity tax. Three Grant Thornton practitioners explore SALT considerations for the technology industry.

In Tax Notes International, Ruth Mason reviews the advocate general opinion in the case against Ireland for granting illegal state aid to Apple. David Rosenbloom and Josiah Child consider the potential consequences of the U.S. Supreme Court's eventual decision in Moore v. United States.

And finally, in Featured Analysis, Nana Ama Sarfo discusses the global implementation of the OECD's automatic exchange of information framework.

David D. Stewart: That's it for this week. You can follow me online @TaxStew. That's S-T-E-W. And be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And, as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

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