SIGNIFICANT progress has been made by members of the Organisation for Economic Cooperation and Development (OECD) and the Group of 20 (G20) to allow countries and jurisdictions to move forward with a historic and major reform of the international tax system.
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) – representing138 countries, 26 of which are in Africa, and making up over 90 per cent of global GDP – agreed an Outcome Statement last week.
The Two‐Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy is expected to ensure a fairer distribution of profits and taxing rights particularly involving the world’s largest Multinational Enterprises (MNEs).
The Outcome Statement agreed at the 15th Meeting of the Inclusive Framework follows 20 months of intense technical negotiations by delegates to continue the work to implement the Two Pillar Solution.
It reflects collaboration and compromise among all jurisdictions – small and large, developing and developed – during negotiations by Inclusive Framework members since October 2021.
‘The Two-Pillar Solution will provide stability for the international tax system, making it fairer and work better in an increasingly digitalised and globalised world economy,’ OECD Secretary-General Mathias Cormann said.
‘We have all been working intensively on the technical details and on the implementation arrangements that are necessary to make the Two-Pillar Solution a reality.
‘The agreement reached…proves that despite the challenges and compromises along the way, multilateral dialogue works and can deliver results to tackle shared challenges requiring shared solutions.
‘This work is critical to governments and our economies – ultimately, to be able to raise the necessary revenue to fund the essential public goods and services for their citizens,’ Cormann added.
The newly agreed Outcome Statement will be delivered to G20 Finance Ministers and Central Bank Governors at their meeting in Gandhinagar, India on July 17 and 18.
In October 2021, the 138 countries and jurisdictions also agreed not to impose newly enacted digital services taxes or relevant similar measures on any company before December 31, 2024.
