Group of Seven Declaration Allows Green Financial Technologies to Thrive
After more than eight years of debate on the issue, Mathias Cormann, Secretary-General of the Organization for Economic Co-operation and Development (OECD), inaugurated a historic international conference protocol Group of 7 finance ministers from the US, Japan, UK, Germany, France, Italy and Canada discuss key elements of global tax reform, aimed at solving tax challenges linked to the digitization and globalization of the world economy. It has happened, the economy is digitizing rapidly.
The deal requires the biggest multinational tech giants to pay a fair share of taxes in the countries where they operate, at least 15% of the world’s lowest tax rate. If the deal is finalized, it will help give impetus to talks among 139 countries in Paris and the broader deal discussed at the next G20 finance ministers meeting in Venice in July.
The G-7 countries also agreed to follow the UK and implement the climate report, and agreed to take action to tackle the proceeds of environmental crime to ensure the market plays a role. in the transition to net zero.
As UK Finance Minister Rishi Sunak said, Say After the G-7 meeting in London:
“The finance ministers of the Group of Seven countries have reached a historic agreement to reform the global tax system and adapt it to the global digital age.
he still has Add to“These earthquake-like tax reforms are something the UK has promoted, and they are also a huge reward for UK taxpayers – to create a fairer and 21st century tax system. This is a truly historic agreement, and I am very proud that the G7 has shown collective leadership at this critical time in our global economic recovery.
OECD Secretary General Coleman also warmly welcomed the results of the G7 finance ministers’ meeting:
“The combined effects of globalization and the digitization of our economy have created distortions and inequalities. It is only through multilaterally agreed solutions that these problems can be effectively resolved.
He continued, “The consensus reached by the Group of Seven finance ministers today, including the lowest level of global taxation, is a decisive step towards the global consensus needed to reform the international tax system. There is important work. But this decision gives an important impetus to the discussions between the 139 Member States and jurisdictions of the future inclusive OECD / G20 BEPS framework. We will continue to seek definitive agreements to ensure fair payments by multinational companies around the world. “
Global tax reform
Finance ministers from the Group of Seven countries endorsed the principles of a two-pillar global tax solution to address the tax challenges posed by the increasingly globalized and digitized global economy proposed by the OECD.
According to the principles of the first pillar, the largest and most profitable multinational companies must pay taxes in the country where they operate, and not just where their headquarters are located. These rules will apply to multinational companies with a profit margin of 10% or more, and 20% of any profit above the 10% profit margin will be redistributed and taxed in the country in which they operate.
According to the second pillar, these companies will pay an overall minimum corporate tax of at least 15% per country.
Improve climate disclosure
Ahead of London Climate Action Week, G7 finance ministers also pledged for the first time to properly factor climate change and biodiversity loss into economic and financial decision-making, thereby accelerating action on environmental issues and making disclosure related issues in the respective economies. In November 2020, the UK became the first country to commit to doing so.
The larger group of G-20 countries are also discussing the promotion of mandatory reporting. Countries are expected to agree to mandatory disclosure of climate-related financial information in their economies before the United Nations Conference of the Parties on Climate Change (COP26) in Glasgow in November.
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Selva ozeli, Esq., CPA, is an international tax lawyer and chartered accountant. He frequently writes articles on tax, legal and accounting matters for Tax Notes, Bloomberg BNA, other publications and the OECD.