Meeting in Riyadh on Sunday 23 February, the G20 Finance Ministers gave a green light to the OECD’s work on international tax reform (see EUROPE 12416/20).
“We endorse the Outline of the Architecture of a Unified Approach on Pillar One as the basis for negotiations”, they wrote in a communiqué issued at the end of their meeting.
“We encourage further progress on both Pillars to overcome the remaining differences and reaffirm our commitment to reach a consensus-based solution with a final report to be delivered by the end of 2020”, the text says.
The communiqué further underlines the importance of the OECD’s Inclusive Framework on BEPS reaching agreement on the main political features of reform at its July meeting in Berlin.
At a press conference, French Finance Minister, Bruno Le Maire once again expressed confidence that an agreement could be reached by the end of the year.
According to him, there is a “consensus” in the OECD on “the need to have a new international taxation system which would be fairer and more efficient”, but also on “the global framework” itself, which is based on greater tax certainty, a package consisting of Pillar I (digital taxation) and Pillar II (minimum company taxation) and the need to find a global solution instead of having many national taxes.
“The only point which is clearly a red line for France and for many OECD countries is an optional solution”, he said.
Indeed, the United States continues to push for a system based on the ‘Safe Harbor’ model, which would allow companies to choose whether or not to apply the new system established by the OECD. Several countries are opposed to this system, including France, Germany and Italy (see EUROPE 12408/2), and also Japan, which publicly criticised the proposal this weekend, according to the Reuters news agency.
Nevertheless, according to Bruno Le Maire, since the United States has promised that the ‘Safe Harbor’ model is not an “optional solution”, it is necessary “to pay all the necessary attention to the American proposal to better understand what is really behind the idea of a ‘Safe Harbor’”.
In an op-ed published Saturday in Le Monde, the French, German, Spanish and Italian finance ministers kept up the pressure by advocating ambitious reform of international taxation.
“We have a collective responsibility to find an international agreement on this issue by the end of 2020. We have an historic opportunity to redesign international taxation in a fair and effective way. Let's seize it!”, wrote Bruno Le Maire, Olaf Scholz, Nadia Calvino and Roberto Gualtieri. (Original version in French by Marion Fontana)