On 24 February 2023 the OECD published its report to the February 2023 meeting of the G20 Finance Ministers and Central Bank Governors.

Inclusive Framework

The report notes that the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) now has 142 member countries and jurisdictions, increasing the transparency of the tax environment and implementing the OECD/G20 BEPS Project.

Two pillar international tax solution

Completion of the international tax reform by implementing the two-pillar solution to address the tax challenges of the digitalisation of the economy is a priority for the Inclusive Framework. The countries that signed the agreement of 8 October 2021 are now working on implementation of the proposals.

On Pillar Two, a large number of countries are moving ahead with legislation, including the 27 EU member states, the UK, Switzerland, Japan, Korea, and Singapore. Technical guidance was agreed on 2 February 2023 to help governments with implementation of the global minimum tax. There are also regional initiatives on implementation of the global minimum tax, such as the guidance issued by the African Tax Administration Forum on a suggested approach to drafting domestic minimum top-up tax legislation.

In relation to Pillar One, following public consultation the Inclusive Framework is working to agree the text of a Multilateral Convention (MLC) by mid-2023.

In January 2023, an updated economic impact assessment issued by the OECD estimated that revenue gains from implementing the two-pillar international tax proposals will be higher than previously expected. The global minimum tax is projected to result in annual global revenue gains of around USD 220 billion, which is equivalent to around 9% of global corporate income tax revenues. The Pillar One rules are projected to allocate new taxing rights on about USD 200 billion in profits each year to market jurisdictions, which is estimated to result in annual global tax revenue gains of between USD 13 billion and USD 36 billion. The OECD estimates that developing country revenue gains from Pillar One will be larger as a proportion of current corporate tax revenues than those in more advanced economies.

Capacity building

The OECD aims to increase capacity building efforts with further tailored training courses and pilot programmes. The OECD/UNDP Tax Inspectors Without Borders (TIWB) Initiative also aims to support developing countries in their efforts to implement the Pillar Two global minimum tax and the OECD will also make further efforts to support countries in their implementation of Pillar One during 2023. The report outlined the continuing work of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Combating tax evasion

The OECD is looking at further work that can be done to combat offshore tax evasion and the use of new technologies such as crypto assets to evade taxes. The OECD favours a whole-of-government approach to combating tax evasion and other financial crimes which frequently involve cross-border operations.