World leaders at the G20 gathering in New Delhi have unanimously approved a declaration reiterating their commitment to building a fair, sustainable and contemporary international tax system appropriate for the 21st century under the title, International Taxation (Part F). The declaration describes the developments in the application of the two-pillar international tax package and emphasises the significance of global collaboration in achieving effective tax reform.
In his address to the summit, Prime Minister Narendra Modi expressed his satisfaction with the consensus achieved, emphasising the collective effort that went into shaping the New Delhi G20 Leaders' Summit Declaration. “I have received good news. Due to the hard work of our team, consensus has been built on New Delhi G20 Leaders' Summit Declaration. My proposal is to adopt this leadership declaration. I announce the adoption of this declaration. On this occasion, I congratulate my Sherpa, ministers, who worked hard for it and made it possible,” Prime Minister Modi declared.
The International Taxation agenda in the New Delhi Declaration can be summarised as follows:
The G20 leaders affirmed their commitment to the swift implementation of the two-pillar international tax package. Notable progress has been made on Pillar One, which includes the delivery of a text for a Multilateral Convention (MLC). Work on Amount B, a framework simplifying the application of the arm's length principle to in-country baseline marketing and distribution activities, is underway. Additionally, the development of the Subject to Tax Rule (STTR) under Pillar Two has been completed.
The G20 urged the Inclusive Framework to promptly resolve pending issues related to the Multilateral Convention (MLC) to prepare it for signature in the second half of 2023. The leaders also set a target to finalise the work on Amount B by the end of 2023.
The G20 acknowledged the steps taken by various countries in implementing the Global Anti-Base Erosion (GloBE) Rules as a common approach to taxation.
Recognising the need for coordinated efforts to effectively implement the two-pillar international tax package, the leaders welcomed a plan for additional support and technical assistance for developing countries.
The declaration highlighted the importance of swift implementation of the CryptoAsset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS).
The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) was tasked with identifying an appropriate and coordinated timeline for commencing exchanges by relevant jurisdictions, with the aim of many jurisdictions starting CARF exchanges by 2027.
The G20 took note of the OECD Report on Enhancing International Tax Transparency on Real Estate and the Global Forum Report on Facilitating the Use of Tax-Treaty-Exchanged Information for Non-Tax Purposes.
(Edited by : Sudarsanan Mani)
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