During a video conference meeting of the G20/OECD Inclusive Framework on BEPS on Thursday 28 January, the German, Italian, British, Canadian, Jamaican, and Indonesian finance ministers hoped that 2021 would be the year of an agreement on international tax reform.
The OECD’s objective is indeed to reach political agreement on the broad lines of reform at the G20 meeting in July (see EUROPE 12579/21).
“We are aware of the high expectations on the G20 on this issue”, said the Italian Finance Minister, Roberto Gualtieri, whose country holds the rotating presidency this year.
“This will be the top priority on our G20 agenda and we will engage with all stakeholders, including the new US Administration, to build political consensus”, he said. As part of this task, he intends to team up with the United Kingdom, which this year is chairing the G7.
German Finance Minister Olaf Scholz, who recently had contacts with Joe Biden’s administration, said there is a “real American will” to find a solution on both pillars of the reform. While such a solution is undoubtedly easier on minimum company taxation (pillar II) than on digital taxation (pillar I), it remains, in his opinion, “possible”, provided that they get down to work now.
“It must be clear that the alternative is not the status quo”, said Roberto Gualtieri, who fears that without an agreement, there will be a proliferation of national measures and increased trade tensions between countries.
Italy is one of the countries that have introduced a national tax on digital services, but this contains a sunset clause stating that it will be withdrawn as soon as an international agreement has been reached.
The UK, too, has introduced its own tax due to the growing demand for more tax justice, but that will also be withdrawn once there is a multilateral solution, UK Chancellor of the Exchequer Rishi Sunak has said.
“Canada is seeking, and prefers, a multilateral solution, but if it cannot be found, we will be forced to move forward on our own”, said Chrystia Freeland, Canada’s Minister of the Economy.
For Nigel Clarke, Jamaica’s Finance Minister, an international consensus is all the more important since small developing countries do not have the capacity to implement unilateral measures in the absence of an agreement, he explained.
For her part, Sri Mulyani Indrawati, Indonesia’s Finance Minister, hoped that when her country assumes the G20 presidency in 2022, it will only have to focus on implementing the reform.
But there is still work to be done at the OECD before it is ready for the July meeting. In the coming months the OECD will work to streamline its proposals to take into account the contributions received during its public consultation (see EUROPE 12636/13), said Martin Kreienbaum, Chair of the Inclusive Framework.
It will also be necessary to resolve the remaining open policy issues, such as the scope and whether the scheme is to be mandatory or not. (Original version in French by Marion Fontana)