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G20 makes slow progress on BEPS

Ahead of the G20 Finance Ministers and Central Bank Governors Meeting in Fukuoka, Japan, on 8-9 June, UK Chancellor of the Exchequer Philip Hammond tweeted ‘I’ll continue to push for changes to global tax rules so they reflect how digital businesses create value. The digital economy has brought great benefits but it is moving at pace & international rules must be updated’.

However, progress on this issue appears to be slow. Commenting on the outcome of the meeting, Sven Giegold, spokesperson for Bündnis 90/Die Grünen in the European Parliament, said: “The progress against tax dumping by digital companies is encouraging. But, there is still a long way to go to reach an agreement. There are significant differences of opinion behind the positions of the G20 states. Not everything that looks technical is truly technical.

The communique issued by G20 ministers at the close of the Fukuoka meeting said: “We will continue our cooperation for a globally fair, sustainable, and modern international tax system, and welcome international cooperation to advance pro-growth tax policies. We reaffirm the importance of the worldwide implementation of the G20/OECD Base Erosion and Profit Shifting (BEPS) package and enhanced tax certainty. We welcome the recent progress on addressing the tax challenges arising from digitalization and endorse the ambitious work program that consists of a two pillar approach, developed by the Inclusive Framework on BEPS. We will redouble our efforts for a consensus-based solution with a final report by 2020. We welcome the recent achievements on tax transparency, including the progress on automatic exchange of financial account information for tax purposes. We also welcome an updated list of jurisdictions that have not satisfactorily implemented the internationally agreed tax transparency standards. We look forward to a further update by the OECD of the list that takes into account all of the strengthened criteria. Defensive measures will be considered against listed jurisdictions. In this regard, we recall the 2015 OECD report inventorying available measures. We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters.”

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