G20 finance ministers endorse corporate tax reform

Finance ministers from the world’s largest economies endorsed global OECD-brokered tax reform plans at a meeting in Washington, DC, on Wednesday. The deal is expected to receive approval from G20 heads of state at a summit later this month.

General agreement on the elements of the tax reform around the reallocation of profits of certain large corporations and a global minimum corporate tax rate was reached in July.

On 8 Oct., the Organisation for Economic Co-operation and Development announced 136 countries had agreed details of the tax overhaul, designed to address the challenges of taxing companies in a digitalised economy.

This included a minimum 15% tax rate on multinational enterprises from 2023. The measure is targeting subsidiary companies operating in low-tax jurisdictions like the Cayman Islands.

It allows the home country of the parent company to collect the difference between the rate paid by the subsidiary in the low-tax jurisdiction and the 15% minimum tax rate.

- Advertisement -

“This agreement will establish a more stable and fairer international tax system,” G20 finance ministers said in a communique issued after the meeting.

“We call on the OECD/G20 Inclusive Framework on BEPS to swiftly develop the model rules and multilateral instruments as indicated in and according to the timetable provided in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023.”

- Advertisement -

Support local journalism. Subscribe to the all-access pass for the Cayman Compass.

Subscribe now