Nothing in the 317 words about international tax in the 37-page Leaders’ Declaration, following the heads of government gathering in New Delhi this weekend, would have surprised any tax director or adviser. The section was in response to the OECD secretary-general’s report to the summit on the organisation’s tax work, which updated leaders on topics such as the two-pillar strategy, transparency, crime and climate change.
The leaders said that they “reaffirm our commitment to continue cooperation towards a globally fair, sustainable and modern international tax system appropriate to the needs of the 21st century” and “remain committed to the swift implementation of the two-pillar international tax package”.
They noted the “significant progress” on pillar one including on the text of a multilateral convention (MLC), which they want to be signed this year, and the work on amount B – how the arm’s-length principle will be applied to in-country baseline marketing and distribution activities – as well as the completion of the work on the development of the subject to tax rule under pillar two.
As well as looking for the MLC to be signed by the end of 2023, the governments called on negotiators to complete the work on amount B according to the same timeline.
GloBE rulemaking
The statement also mentioned approvingly how national governments were implementing the global anti-base erosion rules and a plan to offer additional help and technical assistance to developing countries.
BEPS 2.0 was not the only international tax topic to get a mention from the G20 leaders. They also called for the “swift implementation” of the CryptoAsset Reporting Framework (CARF) and amendments to the Common Reporting Standard, which the OECD unveiled in October 2022. This initiative enables the annual automatic exchange of tax information between the jurisdictions of taxpayers that hold crypto-assets or participate in crypto-asset transactions.
Heads of government also want the Global Forum on Transparency and Exchange of Information for Tax Purposes to keep it updated on the work to get CARF exchanges up and running in the countries that want this facility by 2027.
Of course, this was a meeting of G20 heads of government, none of whom are intimately involved in the negotiations, so you would not expect the section on international tax reform to discuss the technicalities. These post-G20 summit statements would certainly cause a stir if they questioned the detail of what their tax administrators were dealing with.
After all, it was the G20, at the OECD’s prompting, which set the existing international tax reform process in September 2013 by calling on OECD member countries to deliver on an “ambitious and comprehensive plan to restore confidence in the international tax system and ensure that profits are taxed where economic activities and value creation is realised”.
In any case, the nature of post-international summit statements is that they are the subject of negotiation between officials for days, if not weeks, before the event takes place. Governments will already have had some time to digest what their international tax negotiators have been up to.
