The EESC Employers' Group welcomes the G-7 Historic Tax Reform Accord and calls on all countries to conclude an agreement on international taxation rights

The Employers' Group of the European Economic and Social Committee welcomes the agreement to reshape international taxation rules to ensure a consensual system fit for the 21st century across the world.

We need an international agreement to address digitalisation and the use of new business models. The agreement must be fair to all countries, in particular to smaller developing countries.

COVID-19 has exposed the existing inequalities in our societies, with women, young people and those from poorer socio-economic backgrounds being hit the hardest. While globalisation has reduced global inequality, the pandemic has laid bare the significant disparity in economic resilience between and within wealthier nations, emerging market economies and low-income developing countries.

In order to reshape the European economy in line with the objectives stated by the European Commission into a more sustainable, greener and digitalised economy, investments must support environmental goals, while digitalisation contributes to an increase in productivity. Both private and public initiatives are needed if we are to meet environmental, economic and social objectives. Competition must take place on a level playing field. A minimum corporate tax rate and the distribution of tax revenues among countries may contribute to such an outcome.

Now, we are counting on the OECD to find consensus and ensure that its members do not engage in competition with one another or with the 139 countries that have signed up to the Inclusive Framework. An  agreement in principle is expected at the G-20 Venice meeting on July 9 and 10.

The Employers’ Group urges everyone to respect the tax sovereignty of smaller countries, as it is in everyone’s interest to achieve a sustainable, ambitious, and equitable agreement on the international tax architecture.

The agreement will transfer tax revenues to countries with large consumer markets. These countries tend to have high corporate tax rates. Since the G-7 comprise the very largest economies, an agreement would also need to take account of the situation of smaller economies, given the need to comply with the EU Treaty when an agreement is transposed into EU Law.

Most EU Member States do not have a large consumer market and their need to collect taxes for their social objectives must be respected.

It is of the utmost importance that businesses achieve clarity around how their investments will be taxed. An agreement between all countries is therefore urgent. In particular, any uncertainty about the outcome in the US Congress of implementing the rules in the United States needs to be removed.

As the pandemic comes under control, we have an opportunity to transform and relaunch the global agenda with renewed global governance and leadership. We welcome the willingness to coordinate action on critical minerals and semiconductors to promote diversified sources that will bring about more resilient global supply chains.

It is imperative that supply-chain resilience and technology standards are set in such a way that democracies are aligned and support each other. It is in this spirit that we can develop a new partnership to build back a better and fairer world.