G20 could improve on ‘one-sided’ global tax reform

G20 could improve on ‘one-sided’ global tax reform

The author is chief executive of the Tax Justice Network

Following the G7 finance ministers' headline-grabbing commitment to major international tax reforms last weekend, agreement is looking less clear cut. Subsequent moves for opt-outs “” from the UK's hope for a carve-out for finance to China's concerns over its special economic zones “” have been seen by some as threatening the initiative. But this jostling is entirely necessary “” and even positive.

These are likely to be the biggest reforms of international tax rules for a century. They may generate more than a trillion dollars of additional revenues. Political engagement at national and international levels is critical to obtaining a fair outcome and ensuring commitment from the parties.

The OECD process to reform international tax rules has been running since January 2019 and will probably conclude at the October G20 meeting. But the latter's July meeting will be pivotal in setting the basis for agreement on the scope and ambition of new taxing rights over companies ("pillar one“ of the reforms), and on the base and rate for the global minimum tax ("pillar two“).

The same issues arise with both: how large will the additional revenues be, and who will receive them? And how far will countries'