G20 draft communique reportedly endorses global minimum tax

By Doug Connolly, MNE Tax

A draft communique for the upcoming meeting of G20 finance ministers on July 9–10 includes language expressing the countries’ support for a global minimum tax and new rules for allocating profits of multinationals, according to a June 22 report from Reuters.

“We endorse the core elements of the two pillars on the profit reallocation of multinational enterprises and the global minimum tax as set out in the statement released by the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS),” the draft communique states.

The draft does not include a specific rate for the minimum tax, nor does it specify other details that made it into the June 5 G7 communique.

The G7 has agreed to a minimum tax of at least 15% to be calculated on country-by-country basis, as well as agreeing to some details on the portion of multinational profits to be re-allocated. However, such details were not included in the G7 draft communique initially circulated before the June 5 agreement either.

Regarding timing, the G20 draft communique states: “We call on the G20/OECD Inclusive Framework on BEPS to swiftly finalize the remaining technical work with a view to approving the framework for implementation of the two pillars by our next meeting in October.”

Some of the G20 members outside the G7 – including Indonesia, Mexico, and South Africa – have already signaled support for a minimum tax of at least 15%. Questions remain about the acceptability of such a rate to other G20 members, notably China.

The G7 includes Canada, France, Germany, Italy, Japan, the UK, and the US. The G20 includes, in addition, Argentina, Australia, Brazil, China, the EU, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.