G20 Finance Ministers endorse key components of global tax changes and invite holdouts to back the agreement

Executive summary

On 9-10 July 2021, the G201 Finance Ministers and Central Bank Governors met in Venice. At the conclusion of the meeting, a joint communiqué (the communiqué (pdf)) on key topics discussed at the meeting was issued. With respect to the ongoing G20/OECD2 project on addressing the tax challenges arising from the digitalization of the economy (the “BEPS 2.0 project”), the Finance Ministers endorsed the key components of the two pillars on reallocation of profits and a global minimum tax as set out in the Statement released by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on 1 July 2021.3 They also called on the Inclusive Framework to swiftly address the remaining issues, finalize the design elements within the agreed framework and provide an implementation plan for the two pillars by the October G20 Finance Ministers meeting. In addition, they invited the Inclusive Framework member jurisdictions that have not yet joined the agreement to do so.

Detailed discussion


On 12 October 2020, the OECD released a series of major documents in connection with the BEPS 2.0 project. These documents included Blueprints on Pillar One (on new nexus and profit allocation rules)4 and Pillar Two (on new minimum tax rules),5 on which stakeholder comments were requested through a public consultation. At the same time, the OECD also released a lengthy Economic Impact Assessment that was prepared by the OECD Secretariat.6

The cover statement (pdf) by the Inclusive Framework that accompanied the Blueprints indicated that while the Inclusive Framework had not reached a consensus agreement in 2020, which had been the target, they agreed to keep working to swiftly address the remaining issues with a view to bringing the process to a successful conclusion by mid-2021.

On 1 July 2021, the Inclusive Framework issued the “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy” which reflected the agreement of 1307 of the 139 member jurisdictions on key components of the two pillars of the BEPS 2.0 project.8 This followed earlier expressions of strong support for the work on the BEPS 2.0 project that were issued at the conclusion of the G79 Finance Ministers and Central Bank Governors meeting in London on 4-5 June 202110 and at the conclusion of the G7 Leaders’ summit in Cornwall on 11-13 June 2021.11

OECD Secretary-General report

On 5 July 2021, the OECD Secretary-General delivered a tax report (pdf) to the G20 Finance Ministers and Central Bank Governors providing an international tax update. The report included an update on the 1 July Statement and indicated that since its release, Peru had joined the agreement. The report describes the agreement as a historic success that draws on the work done under G20 leadership to ensure more transparency and fairness in the international tax system through the tax transparency efforts and the original BEPS project. According to the report, however, the current international tax system is no longer fit for the increasing challenges of globalization and digitalization, and these challenges can only be effectively addressed through a multilateral solution.

The report also briefly covers tax policy and climate change, stating that the OECD stands ready to facilitate international dialogue and cooperation and to build bridges between countries and regions adopting different policy approaches on the path to net zero emissions. In this regard, the report notes that Finance Ministers have a key role to play, in particular with respect to the use of pricing or equivalent measures as a component of mitigation policy packages.

The report concludes with an update on tax and development matters, indicating that for the October 2021 G20 Finance Ministers meeting, the OECD will present a requested report on progress made by developing countries participating in the Inclusive Framework and possible areas where domestic resource mobilization efforts could be further supported.

Following release of the report, the OECD announced that Saint Vincent and the Grenadines also had joined the agreement, bringing the total number of supporting jurisdictions to 132.

The G20 communiqué

The communiqué issued on 10 July 2021 at the close of the G20 Finance Ministers and Central Bank Governors meeting includes the following paragraph on the BEPS 2.0 project:

After many years of discussions and building on the progress made last year, we have achieved a historic agreement on a more stable and fairer international tax architecture. We endorse the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax as set out in the “Statement on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy” released by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on July 1. We call on the OECD/G20 Inclusive Framework on BEPS to swiftly address the remaining issues and finalise the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by our next meeting in October. We invite all members of the OECD/G20 Inclusive Framework on BEPS that have not yet joined the international agreement to do so. We welcome the consultation process with developing countries on assessing progress made through their participation at the OECD/G20 Inclusive framework on BEPS and look forward to the Organisation for Economic Co-operation and Development (OECD) report in October.

In the communiqué, the Finance Ministers also welcomed the constructive discussions at the G20 High-Level Tax Symposium on Tax Policy and Climate Change, which took place on 9 July 2021 and which explored how tax, in conjunction with regulatory policies, can contribute to reaching environmental objectives. The Symposium provided an opportunity for a reflection upon how G20 Finance Ministers can incorporate this area of economic policy into their work in the future. The communiqué noted the Venice International Conference on Climate on 11 July and its focus on the role of global policies and private sector finance in addressing climate change.


The proposals being developed in the BEPS 2.0 project contemplate significant changes in the overall international tax architecture under which multinational businesses operate. The endorsement by the G20 Finance Ministers of the key components of the two pillars of the project that have been agreed by 132 Inclusive Framework member jurisdictions is an important step in advancing the work on these proposals. Moreover, the G20 Finance Ministers are calling for finalization of the agreement and a detailed implementation plan by October 2021.

However, there is significant work to be done in the Inclusive Framework to flesh out the technical details and address the remaining open issues. There also will be further discussions with the seven Inclusive Framework jurisdictions that have not supported the agreement reflected in the July Statement. In addition, the European Commission plans to publish its proposal for a European Union (EU) Digital Levy on 20 July 2021, which will have implications for the continuing transatlantic negotiations related to taxation of the digital economy. Looking beyond the October 2021 target for final agreement, the implementation process for each of the pillars will need to play out in countries around the world creating further complexity.

It is important for companies to follow these developments closely as they unfold in the coming months and to evaluate the potential impact of the proposed international tax changes on their businesses. In addition, looking ahead, companies will need to monitor activity in relevant countries related to the implementation of agreed rules through changes in domestic tax law and bilateral or multilateral agreements.

Companies also should follow global developments with respect to tax policy and climate change, including activity in the G20, OECD and EU.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, Rotterdam
  • Ronald van den Brekel
  • Marlies de Ruiter
  • Maikel Evers
Ernst & Young Belastingadviseurs LLP, Amsterdam
  • Konstantina Tsilimigka
  • Roberto Aviles Gutierrez
Ernst & Young LLP (United States), Detroit
  • Jeff Michalak
Ernst & Young LLP (United States), Global Tax Desk Network, New York
  • Jose A. (Jano) Bustos
  • Jean-Charles van Heurck
  • Joana Dermendjieva
  • Matthieu Van Remortel
Ernst & Young LLP (United States), Washington, DC
  • Barbara M. Angus
  • Mike McDonald

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.