At the close of the meeting of G20 Finance Ministers and Central Bank Governors held from 25 to 26 July 2024 a Ministerial declaration was issued on international tax cooperation.

The declaration noted that the OECD/G20 Inclusive Framework on BEPS has demonstrated the potential of international tax cooperation over the past decade and is committed to finalizing and swiftly implementing the two-pillar solution. The implementation of Pillar Two will stabilize the global tax landscape, reduce profit shifting, and curb harmful tax competition by retricting the scope for a race to the bottom on corporate tax rates.

The ministerial declaration encourages the Inclusive Framework to complete the negotiations on a final package on Pillar One, by resolving the remaining issues on a framework for Amount B, allowing the Multilateral Convention (MLC) to be finalized as soon as possible.

The declaration notes that the implementation of automatic exchange of information on financial accounts has been an important achievement. It makes financial secrecy, offshore tax evasion, and avoidance more difficult and supports tax enforcement in over a hundred jurisdictions.

The work being undertaken at the UN to develop the Terms of Reference for the UN Framework Convention on International Tax Cooperation (UNFCITC) are a further opportunity to promote inclusive and effective international tax cooperation. The Ministerial declaration notes the need to avoid unnecessary duplication of efforts by building on existing achievements and processes and building on the ongoing work of other international organizations. The UNFCITC should focus on international tax cooperation initiatives that can be effectively implemented and support a stable international tax system.

Ultra-high-net-worth individuals, like other taxpayers, should contribute their fair share in taxes. Aggressive tax avoidance or tax evasion of ultra-high-net-worth individuals can undermine the fairness of tax systems, and reduce the effectiveness of progressive taxation. Greater efforts should be made to ensure full compliance with domestic tax obligations. The international mobility of ultra-high-net-worth individuals creates challenges in ensuring adequate levels of taxation for this group, impacting tax progressivity. International tax cooperation and targeted domestic reforms could help address these challenges.

Complex structuring of transactions and tax planning to conceal tax avoidance and evasion remain a challenge. Tax transparency has been improved by the wide implementation of the automatic exchange of information (AEOI) on financial accounts. Exchanging foreseeably relevant information on crypto-assets and real estate for tax purposes, including beneficial ownership information where it is relevant, requires enhanced international tax cooperation. The ministerial declaration welcomes the ongoing OECD work on advancing tax transparency, including in relation to crypto-assets and real estate.

To combat climate change, the ministers stress the importance of a policy mix consisting of fiscal, market and regulatory mechanisms. This could include the use of carbon pricing and non-pricing mechanisms, and incentives toward carbon neutrality and net zero. Capacity-building initiatives in low-capacity jurisdictions are important.

The ministers intend to cooperate to ensure that ultra-high-net-worth individuals are effectively taxed. Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices. The Inclusive Framework should consider working on these issues in the context of effective progressive tax policies.

Noting the work of the UN Ad Hoc Committee to draft Terms of Reference for a UNFCITC, the Ministers stress the importance of supporting a stable and predictable international tax system and promoting international tax cooperation by reaching broad consensus; prioritizing issues on which there can be consensus that can be effectively implemented; and focusing on enhancing domestic revenue mobilisation (DRM) and capacity building for countries that need this.

Technical assistance is essential to improve DRM in support of the sustainable development goals. The Ministers are calling on the Platform for Collaboration on Tax, international organizations and other development partners to strengthen capacity-building frameworks. They should facilitate the implementation of progressive tax systems that focus on reducing inequalities and promoting economic growth.