PARIS – G20 finance ministers recommitted to implementing a global overhaul of cross-border corporate tax rules next year in the face of concerns that meeting the deadline could prove difficult.
The Organisation for Economic Cooperation and Development, which has shepherded negotiations on the deal from the start, said that it was “still on track” but would need political compromise to take effect next year.
The deadline is widely considered to be highly ambitious, not least because US President Joe Biden’s administration is struggling to pass legislation that would bring US law in line with the global deal.
Years of negotiations culminated last October when nearly 140 countries reached a deal on a minimum tax rate of 15% on multinationals and agreed to make it harder for companies like Google, Amazon and Facebook to avoid tax by booking profits in low-tax jurisdictions.
The technical details are being hammered out at the Paris-based OECD so countries can bring the new rules onto their law books by next year.
G20 finance ministers said in a joint statement after a meeting on Friday they were committed to ensuring the new rules will come into effect at global level in 2023.
“However, the task is daunting and we need your political support and steer to ensure that progress is made in a timely manner,” OECD Secretary General Mathias Cormann said in a report to the G20 finance ministers.
“We need to count on your ability to compromise to make sure that we deliver on time,” he added according to Reuters.
Previous less far-reaching tax agreements took years to be implemented as countries dragged their feet on updating their tax codes.
“The key question is the implementation of our political agreement. There is no turning back, we need to move on,” French Finance Minister Bruno Le Maire told his counterparts during the meeting.
German Finance Minister Christian Lindner said: “It is an unquestionably ambitious timetable, but it is also a major and important project for international tax justice.”
Le Maire invited his G20 counterparts to come to Paris in June to sign the new multilateral legal framework needed to implement the agreement’s first pillar, which makes it harder for digital giants to park profits in low-tax countries.
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