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International Taxation

Since the London Summit in April 2009, the OECD has been at the forefront of fighting against tax evasion, ending bank secrecy and tax havens, and addressing tax avoidance by multinational corporations. OECD contributions to the G20 on tax have helped to reform, reshape and modernise the international tax architecture.

The OECD Secretary-General presents reports to G20 Finance Ministers and Leaders to update them on the progress of international tax co-operation.

Base erosion and profit shifting (BEPS)

Costing governments an estimated USD 100-240 billion in lost corporate income tax revenues per year, tackling BEPS effectively is a global issue, requiring a coherent global approach.

For the first time ever in international tax matters, OECD and G20 countries worked together to develop the OECD/G20 BEPS Package to equip governments with domestic and international instruments needed to tackle tax avoidance.

At the request of G20 Leaders in 2015, the OECD established the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework), now covering 141 members representing a wide diversity of economic profiles, including a significant number of developing countries. All of the members participate on an equal footing. They are committed to implementing the BEPS measures, to undertake peer reviews concerning the BEPS minimum standards, and to finalise the remaining standard-setting work, in particular in relation to transfer pricing.

Addressing the tax challenges arising from the digitalisation of the economy

Addressing the tax challenges raised by digitalisation is currently the top priority for the Inclusive Framework, and has been a key area of focus of the BEPS Project since its inception. This work has delivered several important outputs covering both direct and indirect tax issues.

As of November 2021, 137 member jurisdictions of the Inclusive Framework, representing more than 90% of global GDP, have joined a landmark agreement to address the tax challenges arising from the digitalisation of the economy. The Two-Pillar Solution and Detailed Implementation Plan, endorsed by G20 Finance Ministers and Central Bank Governors at their meeting in October, provide an ambitious timeline for the effective implementation of the new rules by 2023.

Tackling COVID-19

Today, most G20 economies are in the recovery phase of the COVID-19 crisis, during which they will need to create the conditions for robust, resilient and inclusive economic growth, which will be essential in supporting government finances in the future. Tax policy is a key component of governments’ strategies to respond to the pandemic and build a sustainable and inclusive recovery.

Under the Italian G20 Presidency, the OECD has delivered key outputs related to COVID-19, highlighting some of the implications for public finances, and of tax systems in particular, and presented a range of broader structural trends and challenges that countries face, such as the impact of ageing populations, digitalisation, and the need for decarbonisation, among other challenges.

Tax and the environment

A progressive transition to net zero greenhouse gas emissions by around the middle of the century is essential for containing the risks of dangerous climate change. Limiting global warming to 1.5°- 2°C will require climate policy packages that drive transformative changes in production and consumption patterns. While some policies apply an explicit price to carbon emissions, others have the effect of creating an implicit price, with policy mixes depending on countries' specific economic circumstances. With G20 countries accounting for around 80% of greenhouse gas emissions, the G20 is well placed to take forward a structured and systematic dialogue on the role of implicit and explicit carbon pricing that can facilitate greater co-operation among G20 members.

The OECD's work in this area under the Italian G20 Presidency, has focused on carbon pricing, taking stock of current pricing patterns, identifying reform needs to meet mitigation pledges, impacts, and opportunities, and comprehensive approaches to addressing political economy concerns.

According to latest OECD data (October 2021), average carbon prices have risen in G20 economies. But despite significant progress, carbon prices are still too low to meet long-term climate ambitions.

Global Forum on Transparency and Exchange of Information for Tax Purposes

Established in the early 2000s, the Global Forum on Transparency and Exchange of information for Tax Purposes has served its members (originally only consisting of OECD countries) in addressing the risks to tax compliance posed by non-cooperative jurisdictions. In 2009, in response to the G20’s call to strengthen implementation of the tax transparency standards, the Global Forum was restructured and today over 160 members are collaborating on equal footing. Through its in-depth peer-review process, the Global Forum monitors countries’ progress in implementing the EOIR Standard, delivering recommendations and assigning an overall rating against the standard.

Responding to a G20 call to further enhance transparency, the OECD also developed the global Common Reporting Standard (CRS) for the automatic exchange of financial account information (AEOI). Endorsed by G20 Leaders in 2014, the AEOI Standard is a game-changer in terms of deterring and detecting tax evasion, allowing governments to trace assets shifted offshore that were previously unidentified. About 100 jurisdictions have already started to exchange financial account information automatically and over 115 jurisdictions are expected to exchange such information by 2023. The Global Forum has delivered the first assessment of the legal frameworks put in place to implement AEOI and commenced the peer review of their effectiveness in practice.

Tax certainty

In the context of international taxation, concerns over uncertainty in tax matters and its impact on cross-border trade and investment heightened. At the request of G20 Leaders in Hangzhou, the OECD and the IMF explored the nature of tax uncertainty, its main sources and effects on business decisions and outlines a set of concrete and practical approaches to help policymakers and tax administrations shape a more certain tax environment.

A first report was delivered to G20 Finance Ministers in March 2017 and follow-up reports were presented in July 2018 and June 2019. The Secretary-General also reports on tax certainty through his recurring tax reports to G20 Finance Ministers and Central Bank Governors (see e.g. February and April 2021).