G20: Remarks for Session 5 - International Tax Issues

 

Remarks by Angel Gurría, OECD Secretary-General, at the G20 Finance Ministers and Central Bank Governors’ Meeting.

 

Session 5: International Tax Issues

 

10 February 2015, Istanbul, Turkey

 

(As prepared for delivery)

 

I am delighted to present my report to you today. The major message is: with your leadership and all your support we are making good progress towards a more efficient and fairer system of international taxation to the benefit of your governments, your companies and your citizens!


My report is setting out the most recent advances in the BEPS Project as well as our work to support developing countries establish a stronger basis to finance development through the tax system, and our global efforts to tackle tax evasion.


I am glad to report that the work to address BEPS is on schedule. In 2014, a number of measures have already been adopted which required implementation guidance. I am happy to report progress on this front:

 

  • In order to streamline the implementation of tax treaty related BEPS measures, you agreed that a multilateral convention should be the right instrument to amend the existing 3000 bilateral tax treaties. A draft mandate to start the negotiation of such an instrument is submitted to you for approval. An international conference would be gathered shortly after the adoption of the mandate and should conclude its work by the end of 2016. This is an innovative way to move forward which will ensure swift implementation of the measures to fight BEPS in a cost effective manner.

 

  • I am glad to report that the agreement reached in Brisbane on patent boxes (known as the “nexus approach”) has now been endorsed by all countries. We will be working on the implementation of this agreement in the next 6 months, in particular to clarify which expenses should be eligible to the benefit of patent boxes for them not to be harmful.

 

  • Finally, I am presenting to you the implementation guidance on country by country reporting, which will ensure a better understanding of MNE’s planning strategies by tax administrations. Under the Leadership of G20 countries, it has been agreed that all multinationals with revenue above 750 million euros should gather the requested information (sales, profits, taxes, employees and assets) by 2016. Governments will then exchange this information though existing treaties so that the information be properly protected and then used.

 

All this shows that this project progresses at an unprecedented pace in spite of the technical challenges. Your personal support and engagement remains key to guarantee the success of the whole exercise.


I am also glad to report that we now have 62 countries participating in the BEPS Project which includes since January an additional group of 14 developing countries representing a regional balance. This is a historic move, and is a decisive response to your call to ensure that developing countries are more deeply engaged in the reform of the international tax rules, with their needs to be reflected in the BEPS outcomes. We have also institutionalised regional networks of tax policy and administration officials and established a dedicated team to work with and support these countries and leading regional tax organisations. They will ensure that developing countries can effectively contribute to the development of the BEPS measures and also develop specific toolkits to support developing countries in implementing the BEPS measures.


We are also continuing to progress the fight against tax evasion - the 126-member Global Forum on Transparency and Exchange of Information for Tax Purposes is establishing the terms for the next rounds of peer reviews on the standard on exchange of information on request which will commence in 2016.

 

A few countries have remained intransigent though, able to benefit from their failure to implement international standards to the detriment of the majority that do. We must move forward with the G20’s commitment first made in 2009 to ensure tougher incentives are in place to ensure compliance, and this report includes an interim assessment of potential incentive measures, and we look forward to your further guidance to advance this important work. But let me say we have already made big progress thanks to Automatic Exchange of Information: its imminent implementation is forcing “voluntary” disclosures by tax evaders which have already yielded 37 billion euros of additional revenue in around 25 OECD and G20 countries in the last five years.

 

The work is being undertaken on an ambitious timetable and will require the hard work of your teams. But if thanks to your political leadership, we continue progressing at the same pace, I will be in a position to present you the whole 2015 BEPS package at your meeting in Lima, in early October. It will then be available for endorsement by your Leaders in Antalya in November: This will be, undoubtedly, a major deliverable of the G20 this year!