On July 25-26, 2024, the OECD (Organisation for Economic Co-operation and Development) participated in the third meeting of the G20 Finance Ministers and Central Bank Governors in Rio de Janeiro, Brazil. This event, saw the OECD present a series of reports on international tax reform.
KEY OECD REPORTS PRESENTED
OECD SECRETARY-GENERAL TAX REPORT TO G20
The OECD’s Secretary-General Tax Report highlighted the progress in international tax reform since February 2024. This includes updates on the Two-Pillar Solution addressing the tax challenges from the digitalization of the economy and the implementation of the BEPS (Base Erosion and Profit Shifting) minimum standards.
TAXATION AND INEQUALITY
This report examined how tax systems can either mitigate or exacerbate inequality, focusing on the distribution of income and wealth. It provided insights into potential reforms aimed at addressing these disparities.
STRENGTHENING INTERNATIONAL TAX TRANSPARENCY ON REAL ESTATE
Responding to a request from the Indian G20 Presidency in July 2023, the OECD proposed enhanced tax transparency in real estate. The report outlined conceptual solutions for improving transparency voluntarily, aiming to bring these ideas into practice.
BRINGING TAX TRANSPARENCY TO CRYPTO-ASSETS
The Global Forum on Transparency and Exchange of Information for Tax Purposes updated the progress on the OECD/G20 Crypto-Asset Reporting Framework (CARF). This framework extends the automatic exchange of tax information to the crypto-asset sector.
BENEFICIAL OWNERSHIP AND TAX TRANSPARENCY
A joint report by the OECD and the Global Forum examined the importance of beneficial ownership transparency in combating tax evasion and illicit financial flows. It highlighted global progress and identified ongoing challenges and future directions.
HISTORIC ACHIEVEMENTS IN INTERNATIONAL TAX COOPERATION
The meeting concluded with a Communique and the first-ever Ministerial Declaration on International Tax Cooperation. This Declaration and Communique recognized the transformational achievements of the OECD/G20 Inclusive Framework on BEPS over the past decade. The Two-Pillar Solution was acknowledged as a “resounding success” in international tax cooperation.
Since the Inclusive Framework’s landmark agreement in October 2021 to reform international tax rules, the G20’s commitment to the Two-Pillar Solution has been pivotal. The recent meeting reaffirmed this commitment, encouraging members to finalize negotiations on Pillar One and prepare for the signing of the Multilateral Convention (MLC) as soon as possible.
STRENGTHENING TAX TRANSPARENCY AND ADDRESSING INEQUALITY
G20 ministers also emphasized the importance of strengthening tax transparency, praising the Global Forum’s implementation of the Automatic Exchange of Information (AEOI), which has effectively ended bank secrecy and unlocked significant additional revenues, particularly benefiting developing countries.
Addressing tax and inequality was highlighted as a key priority of the Brazilian G20 Presidency. The G20 encouraged the Inclusive Framework on BEPS to consider these issues in the context of progressive tax policies. Additionally, the Platform for Collaboration on Tax, which includes the OECD, IMF, World Bank, and UN, was called upon to strengthen capacity-building frameworks. These efforts aim to implement progressive tax systems that reduce inequalities and promote economic growth, supported by initiatives like the OECD/UNDP Tax Inspectors Without Borders Programme.
LOOKING AHEAD
The OECD looks forward to facilitating the final resolution of the Pillar One package, supporting the implementation of Pillar Two, and collaborating with other international and regional organizations to mobilize domestic resources for the Sustainable Development Goals (SDGs). The OECD is committed to addressing additional policy priorities identified by the G20 and the Inclusive Framework.
SOURCES/RECOMMENDED READ:
- OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors (G20 Brazil, July 2024) | OECD
- Taxation and Inequality | OECD
- Strengthening International Tax Transparency on Real Estate – From Concept to Reality | OECD
- Bringing Tax Transparency to Crypto-Assets – An Update | OECD
- Beneficial Ownership and Tax Transparency – Implementation and Remaining Challenges : OECD and Global Forum Report to G20 Finance Ministers and Central Bank Governors | OECD iLibrary (oecd-ilibrary.org)
- Statement by the Secretary-General on the Rio de Janeiro G20 Ministerial Declaration on International Tax Cooperation | OECD
