Acca has reported that new tax policies announced in the recent G7 communiqué will face hurdles as the proposals are yet to be agreed by the G20 and other jurisdictions, asserting that the three foundations for a sound tax system are simplicity, certainty and stability.
Achieving minimum tax level of 15% across multiple country jurisdictions in particular is seen as problematic with a need to be applied beyond the borders of the G7 nation and potentially even those of the G20, with the need for multi-national companies to pay taxes in countries where they operate and not just where they’re headquartered necessarily creating new legal and accounting challenges for banks, businesses and tax authorities alike.
Though seen as a move in the righty direction it’s seen as merely the tip of the iceberg in terms of achieving ‘true parity and fairness’ in that corporate taxes contribute only a small proportion of overall tax revenue with the bulk being achieved through consumption and personal income taxes.
The 2019 report entitled G20 public trust in tax: Surveying public trust in G20 tax systems showed that 69% of those surveyed were supportive of cooperation on international tax policy to create a more coherent international tax system.
Jason Piper, head of tax and business law at ACCA commented that, ‘Competition on tax policy among countries, whether to take a greater share of revenues or attract multinational business, has been the reality of the international tax environment for many years. What the G7 has announced aims to change this reality – what’s essential is that we all have trust in tax systems and this remains to be seen.’