Remarks by Angel Gurría
18 March 2017
(As prepared for delivery)
Dear Chair, Ministers and Governors,
It is a pleasure to address you all this morning. International tax matters remain an important priority as you work to ensure that the progress made in the last few years is embedded through coherent, global implementation.
My report for this meeting provides you with the latest update on the work of the Inclusive Framework on BEPS, which now has over 90 members. Many are preparing to sign the new BEPS multilateral instrument at the first signing ceremony, at the OECD in Paris, on 7 June.
We are also making progress on tax transparency, which has resulted in countries identifying close to 80 billion euros in unplanned additional revenue. We are also moving towards making global automatic exchange of bank information a reality this year. We cannot afford to drop the ball though, and I want to take this opportunity to remind you that despite the commitments made, several countries do not yet have in place the frameworks that are needed – domestic laws and international agreements – which would enable them to meet the timeline that has been set for AEOI implementation.
I urge you therefore to accelerate preparations in order to be ready for the first automatic exchanges in September 2017 and in 2018, and to convey this very same message to the other 100 committed jurisdictions that also need to be ready.
In the same vein, and based on the criteria you endorsed in July 2016 in Chengdu, I will deliver to Leaders the list of jurisdictions that have not yet made sufficient progress in their commitments to comply with international tax transparency standards.
2017 is not just about implementation however. When we met in Chengdu at the Tax Policy Symposium hosted by the Chinese Presidency and Germany, you identified tax certainty as a critical element in a fast-evolving environment. The results of the work that we undertook upon your request on this important issue are set out in a joint OECD-IMF report that has been shared with you: “Tax Certainty, IMF-OECD Report for G20 Finance Ministers”.
This joint report identifies the sources of – and potential solutions to – tax uncertainty which can hinder trade and deter domestic as well as foreign investment. Thanks to your efforts, tax administrations have been equipped with many more effective tools to fight evasion and avoidance. But we need to keep the balance right and ensure that a favourable tax environment, conducive to investment, is offered to business activities. No room must be left to double non-taxation, but there should be no space for double-taxation either.
Addressing tax uncertainty brings me to the issue of the digital economy and its implications for the tax system. BEPS has addressed the issue of collecting VAT on digital transactions (sales and services) in the destination country. This is a critical achievement with major expected repercussions: more than 100 countries are about to implement this agreement. And we are talking about VAT, so no need to elaborate on the potential additional tax revenues that are at stake!
However, as most Leaders highlighted in Hangzhou, the core issue of the direct taxation of large tech companies, which are very active in countries with no physical presence, remains unresolved. Countries are taking unilateral, uncoordinated, actions which are not very efficient and are creating uncertainty. We would therefore recommend that you seek a commonly-agreed approach to this challenge through the Task Force on the Digital Economy within the G20/OECD BEPS Inclusive Framework.
Before concluding, let me say a few words at the request of the German Presidency on the issue of the Financial Transaction Tax. You will remember that the IMF delivered a report on this subject, at your request, in 2011. No agreement was reached at the time. But several European countries have since sought a common approach and work is being carried forward within the EU – Commissioner Pierre Moscovici will perhaps elaborate. We have analysed the pros and cons of such a tax, which are actually fairly well known. Whether the EU mechanism – which, I understand, is still being discussed as we speak – could gain some traction at a global level will probably depend on its final design and features.
In any case, it has become obvious to us that it will not fly if not adopted by a large number of countries, including those that house the major financial centres of the world.
International co-operation is essential to protect your tax sovereignty. Our collective work on tax, since the establishment of the G20, has focused on ensuring that global taxpayers stop exploiting the lack of co-operation between tax authorities.
Ensuring that we collectively implement transparency and BEPS measures will be key for each of you in setting, freely, the parameters of your own tax system and that you can collect taxes effectively for the well-being of your people.