The Organisation for Economic Co-operation and Development (OECD) said on Wednesday 15 April that the COVID-19 crisis could give “new impetus” to international negotiations on digital taxation (see EUROPE 12416/20).
In a report showing how tax policies can help absorb the cost of the crisis, presented to G20 Finance Ministers, the OECD says that the increased use of digital services during the crisis and the need to collect more revenues could indeed give a strong boost to the discussions.
“Addressing the tax challenges posed by digitalisation of the economy, and ensuring that Multinational Enterprises pay a minimum level of tax, will become more prominent issues after the crisis”, the organisation writes. The reform, which focuses on highly profitable companies, should also facilitate revenue collection without hindering the recovery of companies that have suffered greatly from the crisis, it said.
However, some doubts remain as to whether an agreement on international tax reform can be reached at the OECD by the end of 2020.
At the end of March, the OECD gave assurances that COVID-19 was not interrupting the schedule and that work was continuing (see EUROPE 12449/10) with a view to reaching agreement on the main political features of the reform at the G20/OECD Inclusive Framework meeting on the BEPS in Berlin in July. But, according to Reuters, Berlin is now considering whether to postpone the conference because of the pandemic.
Overall, the views of stakeholders seem to be divided. While some are pushing to maintain the momentum on digital taxation and make it an important tool for economic recovery, others have called for a postponement of discussions, mainly because no one knows what the global economy will look like after the crisis.
In their final communiqué, issued on Tuesday 14 April, the Finance Ministers and central bank governors of the G7 countries seemed to put the subject on the back burner. With the priority being to restore economic growth, they indicated that they will return to other priority items on the international agenda, including digital taxation, “once the immediate impacts of the crisis abate”.
On Wednesday, G20 Finance Ministers, for their part, affirmed in a communiqué their commitment to protect the resilience of the financial system, “while continuing to tackle the global challenges, notably those related to addressing the tax challenges arising from the digitalisation of the economy”.
For its part, the OECD report assures that the work of the Inclusive Framework “is ongoing and progressing, keeping track of the changing global economic circumstances”.
See the OECD report: https://bit.ly/2K6uMF5 (Original version in French by Marion Fontana)