After years of trying to agree on how to implement a global minimum tax rate so as to rid the world of tax havens, G7 finance ministers agreed on a plan that aims to do just that earlier this month. Those finance ministers will now take the plan to the G20 meeting scheduled for Rome in July with the ultimate goal of getting all 38 members of the Organization for Economic Co-operation and Development (OECD) on board.
OECD Secretary-General Mathias Cormann praised the plan in a statement the day it was announced, saying, “Today’s consensus among the G7 Finance Ministers, including on a minimum level of global taxation, is a landmark step toward the global consensus necessary to reform the international tax system.”
The G7 plan lays the groundwork for continued talks between countries involved in the OECD/G20 Inclusive Framework, a coalition of more than 135 countries, Thornton Matheson, a senior fellow at the Urban-Brookings Tax Policy Center, told The Dispatch. The goal of the Inclusive Framework is to cut back on the amount of tax avoidance in the world. Established in 2016, the Inclusive Framework has offered rules and regulations for countries to implement in order to cut back on multinational companies avoiding taxes.
One goal of a global minimum tax is to reduce “base erosion and profit sharing,” or BEPS as it’s often referred to. The OECD website describes BEPS as “tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax.”