Finance ministers from the G20 have backed the global tax agreement brokered by the Organisation for Economic Co-operation and Development and urged that a detailed implementation plan be finalised by October.
Following a meeting of G20 finance ministers and the Central Bank in Venice on 9 and 10 July, a communique confirmed that the group “endorsed the key components” of the two-pillar approach to address taxation of multinationals and the issue of profit shifting in a digital economy.
It also called on the Organisation for Economic Co-operation and Development (OECD) and G20 to “swiftly address the remaining issues” with the inclusive framework on base erosion and profit sharing (BEPs), to finalise the design elements and agree “a detailed plan for the implementation of the two pillars” by October.
More than a decade in development the OECD’s two-pillar package would create an effective global minimum corporate tax rate of at least 15% and could see $100bn of profits reallocated each year to countries in which corporations operate, but currently pay no tax.
On 6 July, the OECD confirmed that 130 countries had backed the agreement and it has now confirmed that Peru and Saint Vincent and the Grenadines have also provided support taking the total number of countries involved to 132.
The backing of the G20, which includes Australia, Brazil, Russia, Turkey and the EU, follows that of the G7 in May.
Rishi Sunak welcomed the G20’s backing of the “historic tax deal”, but highlighted that more work was needed.
“We must continue to build on this momentum over the coming months and work together as an international community to create a fairer tax system, which cracks down on tax avoidance and levels up our high street,” he said.
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