With global economic activity facing a historic drop and government spending rising dramatically, the implications of the Covid-19 crisis on public finances and tax revenues are significant. Drawing on its multi-disciplinary expertise, the OECD is deploying its data gathering and analytical capacities to help governments face these unprecedented challenges while supporting businesses and people towards economic recovery.
Today’s OECD Tax Talks webcast provided a full update on the OECD’s work on taxation in the context of Covid-19. Governments worldwide are taking multifaceted actions to support their citizens and businesses and maintain the provision of vital public services, often putting new and unforeseen pressure on public finances. The OECD is providing critical advice on a a range of tax topics while using its large tax co-operation network to facilitate collaboration among all countries.
A recent report presented to the G20 in April 2020 took stock of the emergency tax and fiscal policy measures introduced by countries worldwide in response to the crisis. With more than 700 measures from over 100 countries collected so far, the OECD Covid-19 tax policy tracker shows that tax and fiscal policy responses are playing a key role in limiting the hardship caused by containment measures, and should continue to do so as governments seek to pursue economic recovery from the global pandemic.
Among these actions are measures being taken by tax administrations to ease the burdens on taxpayers and to support businesses and individuals with cash flow problems, with difficulties in meeting tax reporting or payment obligations or otherwise facing hardship.
The strict quarantine requirements in countries worldwide have led to new concerns over tax treatment of cross-border workers, many of whom are stranded in a country that is not their country of residence or unable to physically perform their duties in their country of employment. This situation has an impact on the right to tax between countries, which is currently governed by international tax treaty rules that delineate taxing rights. The OECD encourages countries to work together to alleviate the unplanned tax implications and potential new burdens arising due to effects of the Covid-19 crisis, and has issued guidance on these issues per member countries’ request.
The challenges of the Covid-19 crisis are magnified for developing countries, which have a greater reliance on tax revenue from large taxpayers than more advanced economies. They will require specific support – notably significant financial support – for helping health and fiscal systems withstand the current shocks. To this extent, the OECD/G20 Inclusive Framework on BEPS and Global Forum on Transparency and Exchange of Information for Tax Purposes are strengthening the capacity of their members through a set of online workshops and courses, carried out in partnership with regional organisations.
Multilateral efforts to address the tax challenges arising from digitalisation of the economy continue, with meetings conducted remotely with delegates since the Covid-19 outbreak began in March. Delegates from the Inclusive Framework on BEPS continue working towards a G20 mandate of reaching a multilateral, consensus-based solution by year-end. They have agreed to postpone the delivery of a political decision from a plenary meeting scheduled for July in Berlin to a new, as-yet undetermined date in October. A virtual plenary meeting of the Inclusive Framework on BEPS is scheduled for July 2020, where delegates will discuss a range of ongoing work, including the fiscal aspects of the Covid-19 crisis.