After meeting in late May and early June, the G7 Finance Ministers and Central Bank Governors indicated that they are strongly in favor of measures being taken in connection with the G20/OECD Inclusive Framework to address certain tax concerns created by globalization and the digitalization of the economy; they are also in favor of enacting a global minimum tax.
The statement, described in a Treasury press release from June 5, is an indication of growing consensus amongst G7 members (United States, Japan, Germany, France, Italy, Canada and the United Kingdom) around Pillar One and Pillar Two initiatives.
- Regarding Pillar One, the G7 Finance Ministers and Central Bank Governors commit to reaching a fair and equitable allocation of taxing rights, with market countries being awarded taxing rights on at least 20% of profits exceeding a 10% margin (for the largest and most profitable international businesses).
- The G7 Finance Ministers and Central Bank Governors plan to coordinate around the interaction and application of new international tax rules and repealing Digital Services Taxes, and other measures, on all companies.
- Regarding Pillar Two, the G7 Finance Ministers and Central Bank Governors commit to a 15 percent global minimum tax on a country-by-country basis.
- The G7 Finance Ministers and Central Bank Governors agree on the importance of enacting policy in parallel on both Pillars and plan to push for an agreement at the meeting of G20 Finance Ministers and Central Bank Governors in July 2021.
The Communique also indicates that the G7 will focus on sustainability, inclusive global economic recovery, climate change, biodiversity loss and continued support to the poorest and most vulnerable countries. These priority initiatives can be expected to affect tax policy in G7 countries and beyond.
You can find the Communique here: G7 FINANCE MINISTERS & CENTRAL BANK GOVERNORS COMMUNIQUÉ | U.S. Department of the Treasury