OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors. Italy. April 2021. It is a little over a year since COVID-19 was officially declared a pandemic. While progress is being made in addressing this global health crisis with the intensive vaccination efforts currently underway, the recovery from the COVID-19 crisis will be uneven, potentially leading to lasting changes in the world economy. As Secretary-General of the OECD for the last 15 years, this is the second global economic crisis I have helped countries navigate. As I approach the end of my term, it is my lasting hope that we learn from the lessons of the previous crisis to restore our economies and build back better, more inclusive and sustainable growth. Governments must continue to provide fiscal support, use policy instruments actively and nurture international co-operation, which has never been more important after a year of closed borders and burgeoning protectionism. As you have uniquely demonstrated in the field of international tax, multilateralism can yield transformational results. Tax challenges arising from the digitalisation of the economy – We are at a critical juncture in the ongoing negotiations among 139 jurisdictions to address the tax challenges arising from digitalisation. The next three months, from now to your next meeting in July 2021, will be decisive and the conditions to reach a consensus-based solution have never been better with the removal of the so-called “safe harbour” proposal by the US. With your strong leadership, unequivocal political support and active involvement, the G20/OECD Inclusive Framework on BEPS (hereinafter G20/OECD Inclusive Framework) is ready to respond to your call to urgently reform the current international tax system and achieve a global and consensus-based solution by mid-2021. Beyond corporate income tax, we continue to advance our work on tackling other tax issues arising from the digitalisation of the economy as regulators and tax administrations strive to catch up with emerging technologies. • Virtual Assets: Since my last report, the market capitalisation of virtual currencies has increased strikingly yet again (over USD 1.8 trillion as of 1 April 2021). In order to make sure these new assets are properly reported to the tax authorities of the countries of residence of their owners, we are developing a new tax reporting framework on crypto assets, with a view to presenting a technical solution to you soon. The new framework should address concerns that the advances made on tax transparency and eliminating bank secrecy over the past decade are not undermined by new assets. • The Gig Economy: The OECD will soon release a landmark report on how to design and implement an effective value added tax (VAT)/goods and services tax (GST) policy response to the growth of the sharing and gig economy, building on the success of the OECD’s standards for the effective collection of VAT on online sales of goods, services and digital products now introduced by 70 countries. In addition, agreement should soon be reached on a new international exchange framework to facilitate the cross-border exchange of information (EOI) based on the OECD model rules for reporting by platform operators, welcomed by you last July. Responding to the COVID-19 crisis – Last April, as governments around the world considered which emergency tax measures to take to support their citizens and businesses through the initial phases of the pandemic, the OECD provided you with guidance and a compendium of the 700 measures that countries had already taken or were considering in the report Tax and Fiscal Policy in Response to the Coronavirus Crisis (hereinafter the April 2020 Report). I am now pleased to present an update of the April 2020 Report, Tax and Fiscal Policy in Response to the COVID-19 Crisis (hereinafter the April 2021 Report), attached as Annex A to this report. The April 2021 Report provides an overview of the tax measures introduced during the COVID-19 crisis across 66 countries and jurisdictions since the outbreak of the pandemic, examines how tax policy responses have varied and evolved since last year, offers guidance as to how tax policy could be adapted to meet short-term challenges and outlines OECD work in the pipeline to help countries reassess their tax and spending policies in the longer run. One year into the pandemic, the current priority for governments is to improve the targeting of tax relief to ensure that support is channelled to those who need it most and to carefully withdraw support where it is no longer needed. Whereas the April 2020 Report detailed the emergency tax measures introduced in the initial stages of the crisis, the April 2021 Report shows that an increasing number of countries are turning to fiscal stimulus and many have introduced or announced new tax increases. Moreover, while a number of such tax increases involved one-off or temporary measures, most are intended to last, such as increases in fuel excise duties and carbon taxes, which were the most common tax increases reported by countries. Going forward, countries will have to avoid the premature withdrawal of relief but increasingly target it to the most severely affected businesses and households. As economies reopen, additional fiscal stimulus, including through well-designed tax measures, could play a significant role if economic activity remains sluggish. Once policymakers have successfully navigated the pandemic, the post-crisis environment will provide an opportunity for countries to fundamentally re-assess public finance policies and re-orient tax systems towards more inclusive and sustainable growth. The OECD will be on-hand to help countries build back better, including through tax reform.
OECD (2021), OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors – April 2021, OECD,