G7 Finance Ministers and Central Bank Governors Meeting: Sequence 2: International Taxation
Remarks by Angel Gurría
17 July 2019 - Chantilly, France
(As prepared for delivery)
Dear Ministers and Governors,
You have played a crucial role in building the momentum needed to make substantive progress on international taxation both here in the G7 and at the G20.
Having addressed the automatic exchange of information on financial accounts – which meant that, in 2018, for the first time, information on 47 million offshore accounts with a total value of around 4.9 trillion Euros were exchanged – we now have the opportunity to complete the work on Base Erosion and Profit Shifting, and stabilise the international tax system.
It is now crunch time to find a consensus-based solution to address the tax challenges arising from the growing digitalisation of the economy. Today, we must look forward to drive this process towards a successful conclusion.
The absence of consensus here and at the G20 will lead to a fragmentation of the international tax system and to an increasing number of disputes. The risk of further disturbing the already turbulent business and investment environments, and hence the stability of the global economy, is very high.
A group of G7 tax experts gathered in Paris last month to discuss further technical progress on the two pillars laid out in the Programme of Work that was endorsed by G20 Leaders in June.
Significant progress was made and agreement was reached on the key factors of the unified approach that is called for under the Programme of Work.
The ingredients include:
- A new nexus rule which would target companies doing business without a physical presence in the market country.
- Revised profit allocation rules, which would increase the amount of profit allocated to market countries through a three-tier approach to taxable returns.
- The adoption of robust measures to prevent and resolve disputes, and avoid double taxation.
To reach a truly global agreement, we need to have all of you on board and involve all countries, including developing and small economies.
This target is hard and the deadline is ambitious, but with your leadership and commitment, it is doable. We are on track, and the OECD will continue to support you in fulfilling the great responsibility ahead of us.
A decision in this group is the first, indispensable step towards a global blueprint to be reached at the G20 Finance Ministers meeting next October.