UK and International Tax news
G7 International Tax Measures
Friday 11th June 2021
Following meetings in London on 4-5 June 2021, Finance Ministers and Central Bank Governors of the G7 countries have issued a communique expressing support for the OECD/G20 Inclusive Framework efforts to address the tax challenges arising from globalization and the digitalization of the economy and to adopt a global minimum tax.
The G7 communique suggested political agreement between Canada, France, Germany, Italy, Japan, UK, US and representatives of the EU on commitments to:
- reach an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises.
- provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies.
- a global minimum tax of at least 15% on a country by country basis.
- agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors
Despite reports in the media that agreement had been reached on minimum tax, taxing rights, and the taxation of residual profits in market jurisdictions, there is little detail contained in the communique. However, there may be a greater likelihood of reaching consensus at the next meeting of the OECD/G20 which continues to develop the detailed proposals contained in the Pillar One and Two Blueprints issued in October 2020.
The proposals will need to be put to the G20 in July, where they will be considered by the larger group of countries including China and India. Thereafter, if and when rules have been finalised, they will still need to be put to and agreed by the 139 members of the Inclusive Framework before they can have global application.
If you would like more detail on the above, including OECD’s work on Pillars 1 and 2, please contact Keith Rushen on 0207 486 2378.Contact Us