2021-10-14-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_4页_232kb

Summary of G20 Taxation Statement

Background

On October 13, 2021, G20 finance ministers endorsed the two-pillar approach on base erosion and profit shifting designed to address issues with multinational enterprise taxation, as outlined by the OECD/G20 Inclusive Framework (BEPS). This follows agreement by 136 members, now including recently onboarded EU countries Estonia, Hungary, and Ireland, though some countries remain unapproved. The agreement updates parameters from the July 2021 statement and aims for implementation.

Agreement Progress

The two-pillar solution reallocates profits from large multinationals to market jurisdictions and establishes a global minimum tax. Estonia, Hungary and Ireland have now joined the agreement.

Implementation Steps

• By November 2021, the model rules and multilateral instrument provisions are expected to be developed.
• Key milestones include a multilateral convention (MLC) by early 2022 with subsequent signing and ratification aimed for critical mass by mid-2022 to potentially bring rules into effect from 2023.
• Pillar Two rules aim for law enactment in 2022 with effectiveness in 2023.

EU Comment

The EU Commission will propose a directive for EU implementation of Pillar 2 and will assess the need for one for Pillar 1. The EU now includes all 27 member states. Additional EU initiatives include fighting shell companies and increasing transparency through tax disclosure requirements.

Key Elements

• The G20 supports a framework addressing multinational enterprise tax and a minimum global tax.
• Progress is tracked, pending ratification and legislative steps.
• The EU is moving towards directives based on Pillar 2, and needs agreement on Pillar 1.