In Fukuoka on Sunday, 9 June, G20 Finance Ministers committed themselves to “redoubling their efforts” to reach an agreement on international tax reform in 2020 and endorsed the OECD's programme of work setting out the way forward (see EUROPE 12267/17).
The G20 final communiqué states: "We welcome the recent progress on addressing the tax challenges arising from digitalisation and endorse the ambitious work programme that consists of a two-pillar approach, developed by the Inclusive Framework on BEPS”.
At a press conference, French Finance Minister Bruno Le Maire expressed optimism that a consensual approach could be achieved by the end of 2019. “There are several proposals on the table: the American proposal, the British proposal, the emerging countries’ proposal. We will be working extremely hard in the next few weeks to reach an agreement”, he said.
The Minister believes that the two pillars, i.e. taxation of the digital economy and an effective global minimum corporate tax, must go hand in hand. “There is no point introducing digital taxation if large companies can avoid it by investing their profits in tax havens. So we need to have both”, he insisted.
On Sunday, the United States expressed its disagreement with the unilateral measures on digital taxation taken by France and the United Kingdom and acknowledged the urgency of avoiding a fragmented system. The delegation also stressed that the chosen approach should not discriminate against the technology sector.
The United States is in favour of an approach that does not apply solely to a subset of companies with a strong digital dimension and would prefer it to be more wide-ranging, in order to address the more significant consequences of the digital transformation of the economy (see EUROPE 12262/14).
When asked about the American approach, the French minister said he was “open” to more wide-ranging taxation. “We agree that this idea from the American delegation can be used as a starting point, with the caveat that I have articulated very precisely and that I have discussed with my American counterpart: the digital economy, which creates profits from the use of data (...) must be specifically taxed”, he explained. (Original version in French by Marion Fontana)