G20 finance ministers consider tax implications of digitalization, tax certainty

G20 finance ministers and central bank governors, in a communique following their March 17–18 meeting in Baden-Baden, Germany, called on an OECD task force to produce an interim report on the implications of digitalisation for taxation by spring 2018. The ministers also requested an update in 2018 regarding OECD and IMF work on tax certainty.

“As part of the [OECD/G20 base erosion profit shifting (BEPS)] project, we have undertaken a discussion on the implications of digitalisation for taxation in the OECD Task Force on the Digital Economy (TFDE). We will further work on this issue through the TFDE and ask for an interim report by the IMF and WBG Spring Meetings 2018,” the ministers said.

An OECD Secretary-General report to the G20 finance ministers, released in advance of the meeting, advises that the tax consequences of digitalisation “must be addressed in a way that avoids uncoordinated unilateral actions which would not be conducive to growth.”

The OECD report notes that the final BEPS package calls for a final report on the tax challenges of the digital economy by 2020, including consideration of the issue of value creation in a digital economy.

In the communique, the ministers also acknowledged an OECD and IMF report on tax certainty, released March 18, and asked the two organizations to assess progress in enhancing tax certainty in 2018.

The OECD/IMF report makes recommendations to countries that seek to ensure a more predictable business environment conducive to growth. It includes a discussion of responses to an OECD survey of the business community about tax certainty.

“We . . . encourage jurisdictions to consider voluntarily the practical tools for enhanced tax certainty as proposed in that report, including with respect to dispute prevention and dispute resolution to be implemented within domestic legal frameworks and international tax treaties,” the ministers said.

The ministers also again expressed their commitment to widespread implementation of the BEPS package.

“We ask the OECD to report back on the progress of BEPS implementation, including on all the four minimum standards, by the Leaders Summit in July 2017,” the ministers said.

Further, they said the welcomed the growing membership of the Inclusive Framework on BEPS and “look forward” to the first signing round on of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS on June 7.

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