On 18 July 2020 the OECD published the tax report prepared for the virtual meeting of G20 Finance Ministers and Central Bank Governors hosted by Saudi Arabia.

The OECD report notes that the tax agenda has been made even more relevant in the light of the COVID-19 crisis. Effective tax policy responses will be necessary during the recovery from the crisis.

Tax Challenges of the Digital Economy

Work on finding a solution to the tax challenges of the digital economy has progressed well in relation to both Pillar One establishing the new nexus and reallocation of taxing rights and Pillar Two ensuring a minimum level of taxation. The aim is to deliver blueprints for each Pillar at the October 2020 meeting of G20 Finance Ministers. Simplification measures are to be incorporated into Pillar One and work is continuing to finalise the technical design of Pillar Two.

Transparency and Information Exchange

In 2019 tax information was exchanged in relation to around 84 million financial accounts with a total balance of around EUR 10 trillion. Led by the OECD’s Global Forum, jurisdictions have cooperated through the exchange of tax information on request and then the automatic exchange of information, carried out through more than six thousand bilateral relationships globally in 2019.

Reporting by Platform Operators

Another development has been to draw up model rules for reporting by digital platform operators in relation to sellers in the sharing and gig economy. This tool has been approved by the 137 member countries of the OECD’s Inclusive Framework and in addition to assisting taxpayers and the platforms themselves with their tax compliance obligations this can ensure a level playing field between digital and traditional businesses in sectors such as accommodation and transportation.

Base Erosion and Profit Shifting (BEPS)

Following the OECD’G20 BEPS reports and their implementation the place where tax is assessed is better aligned with the location where value is created. Improvements are also visible in tax transparency and in dispute resolution mechanisms.

The OECD report notes that developing countries are often more reliant on corporate tax revenues and are therefore more vulnerable to loss from base erosion and profit shifting. Training and capacity building efforts by the OECD and its partners in the Platform for Collaboration on Tax have placed developing countries in a better position to deal with the current economic crisis.

Tax Certainty

The OECD’s Forum on Tax Administration launched the International Compliance Assurance Programme (ICAP) to carry out multilateral risk assessment and assurance using Country by Country (CbC) reports and other information to provide multinational enterprises and tax administrations with increased tax certainty. The second pilot scheme (ICAP 2.0), has begun and includes 19 tax administrations. Also practical tools are being developed to support developing country tax administrations in interpreting CbC reports. The FTA is also promoting joint audits of tax administrations including tax experience-sharing between countries.