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OECD Secretary-General

4th G20 Finance Ministers and Central Bank Governors Meeting

 

Remarks by Angel Gurría 

OECD Secretary-General

Session 2: International Taxation

OECD, Paris France - Wednesday, 14 October 2020

 

Dear Ministers, dear Governors

Addressing the tax challenges of the digitalisation of the economy has been one of your key priorities over the past three years. Though no agreement has been reached yet, we are not far from the finish line and the 137 members of the OECD/G20 Inclusive Framework remain committed to finalise the job as soon as possible. Thanks to their hard work, I can today present you with the Blueprint reports on both Pillars, which would comprise the long-term solution. 

Pillar One would establish a new way of sharing taxing rights among countries to address the tax challenges of digitalisation. In an increasingly digital age, we can no longer determine taxing rights exclusively by reference to physical presence.

Pillar Two, which builds on the G20/OECD BEPS work and suggests a global minimum tax for multinational companies, would stop the race to the bottom, and draw on what the US has already done with their GILTI provision introduced as part of its 2017 tax reform. This two-pillar approach would stabilise and future proof the international taxation system, providing sustainable rules to help foster employment, investment and growth.

With the COVID-19 crisis, we have seen the economy digitalising even faster. You have so far invested trillions of dollars to support the economy. It is now very important to make sure companies pay their fair share of tax where they operate and stop shifting profits to low tax jurisdictions. Our impact assessment - delivered to you as part of my report - shows that, overall, the solution the OECD/G20 Inclusive Framework is proposing would reallocate around USD 100bn among countries and would increase tax revenues by an equivalent amount.

To get there, I am pleased to share this detailed proposal, which all 137 Inclusive Framework members agree is a solid basis for a future agreement. It is imperative that this work crosses the finish line - and we are very close. Not reaching an agreement is the last thing we need: it would lead to a proliferation of unilateral digital services taxes and an increase in damaging tax and trade disputes, which would further undermine tax certainty and investment. Failure to reach agreement could reduce global GDP by more than 1% - close to a trillion dollars - at a time when we can least afford it.

We have released this package as part of a public consultation process, which will also give us time to solve the political differences that have so far hindered a full-fledged solution.

We have come a long way. Now, let’s go for the home stretch. Political leadership and a spirit of compromise are needed to get us over the finish line as soon as possible.

The OECD and the 137 members of the Inclusive Framework are ready and eager to get to work to design, develop and deliver a truly multilateral solution for better digital tax policies for better lives.

 

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