G20 leaders pledge commitment to co-operate on international tax system

international tax system

14th December 2018

Here at 6CATS, we are firmly embedded in the world of the international tax system and compliance and are keen observers of the steps that countries are taking to co-operate in the fight against tax evasion. The latest development of this movement was last week, at the G20 Summit in Buenos Aires. Countries from all around the world met to discuss global challenges and one of the outcomes from the meeting was a pledge to increase efforts worldwide towards cutting down on tax evasion.

Here’s what happened:

‘A globally fair, sustainable and modern international tax system’

At the meeting, G20 leaders reaffirmed their commitment to improving the international tax system, stating in a joint release that:

“We will continue our work for a globally fair, sustainable, and modern international tax system based, in particular on tax treaties and transfer pricing rules, and welcome international cooperation to advance pro-growth tax policies.”

The leaders also acknowledged that the worldwide implementation of the OECD/G20 base erosion and profit shifting (BEPS) package, something we mentioned last week, ‘remains essential’. Furthermore, leaders promised to co-operate in finding consensus-based solutions to address the impacts of the digitalisation of the economy on the international tax system.

The Director of the OECD Centre for Tax Policy and Administration, Pascal Saint-Amans, reported that during the leaders’ discussions on digital taxation, French President Emmanuel Macron argued in favour of ‘BEPS 2.0,’ namely, a minimum corporate tax, while US Treasury Secretary, Steven Mnuchin, said the US favoured a broad approach to dealing with digital economy taxation issues.

A global movement?

The G20’s commitment to work together is not just hyperbole. Countries have been collaborating to crack down on fraud for a number of years now. With the introduction of schemes such as the Common Reporting Standard already showing results after only a short time, and new technologies such as blockchain enabling an unprecedented speed of co-operation, authorises are becoming more effective at collecting tax. When combining this with the complicated nature of modern tax systems, it’s easier than ever to unwittingly make an error on tax reports and be punished for it. Therefore, contractors need to be aware of the risks around international compliance, especially as the G20 contains some of the most exciting contracting destinations in the world. Here at 6CATS, we recommend employing an expert contractor management service to take the weight off, and make your job the only thing you have to think about.

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