On 11 May 2023 the OECD published a progress report on tax cooperation for the G7 Finance Ministers and central bank governors.
A report on these issues had been produced in 2022 and the G7 Finance Ministers asked the OECD to continue its work on the issues and report back on further developments. For the G7 Finance Ministers meeting in May 2023 the OECD was therefore invited by the G7 to prepare a follow-up report setting out the progress made and the new areas of tax cooperation.
The progress report issued on 11 May 2023 looks at how the principles of the 2022 report are being included in the design of the two-pillar solution on international tax. Also, it looks at the principles from the 2022 report in areas beyond corporate tax, examining how technology-based solutions are being developed for effective collection and use of information for personal tax purposes. The report also examines recent developments in capacity building and looks at the work that still needs to be done.
Corporate income tax
The OECD is continuing to include principles from the 2022 report into the administrative framework of the two-pillar solution and setting it as a central objective of the administration of multilaterally agreed common rules. The OECD is working towards a streamlined, collaborative and digitally enabled administration of international tax rules. Common rules and common information reduce the risk of duplication of costs and outcomes. Co-ordinated, multilateral rule design is then possible and can be administered effectively.
As international tax cooperation depends on tools for effective digital communication, the OECD is working on a secure mechanism for tax administration communications, and this will be a part of the multilateral tax rules.
Beyond corporate income tax
The principles of real-time information and compliance by design are being incorporated into all new reporting regimes, and the standardisation of information architecture within data repositories is being increased. The international information exchange architecture is being used to evaluate changes in business models and taxpayer behaviour; assess the most effective format for receiving and using quality information; reduce compliance burdens associated with information exchange; and streamline the use of the information exchanged.
Standardised documentation and common international risk assessment approaches could be relevant to personal income tax in relation to highly mobile workers, and in value added tax (VAT) and other taxes that have a cross-border element.
Developing countries
The G7 countries will use their resources (including financing, expertise and political dialogue) to deliver capacity building. Tax policy and administration are focusing on the digitalisation of the economy through the two-pillar solution, the crypto asset reporting framework (CARF), the guidelines for VAT and digital trade and the use of digital tools by tax administrations.
The G7 countries will help countries implement the Pillar Two rules, especially the domestic minimum top-up tax; to support VAT reforms related to e-commerce and digital trade; and to assist the digitalisation of tax administrations, through the Forum on Tax Administration and other international organisations.
