G20 Finance Ministers and Central Bank Governors Meeting

What Is an International Tax Rule?

• International tax rules apply to income companies earn from their overseas operations and sales.
• Tax treaties between countries determine which country collects tax revenue and anti-avoidance rules are put in place to limit gaps companies use to minimize their global tax burden.

Purpose of cross-border tax rules?

• When a company earns profits in a foreign jurisdiction it will often send some of those earnings back to its headquarters, which may distribute a portion to shareholders as a dividend. 
  • Each of these activities could trigger one or more international tax rules.
• International tax rules define which countries tax the profits of a multinational business.
• Generally, the purpose is to ensure that the income of companies is taxed once rather than multiple times by multiple jurisdictions.

Economic Impacts of International Tax Rules? 

• This is done to eliminate double taxation through clear tax treaties and limited rules that require foreign earnings to be taxed in headquarter countries. 
• Many countries have been adopting or strengthening their anti-tax avoidance rules on cross-border income in recent years.
  • These policies, like transfer pricing rules, controlled-foreign corporation rules, and thin capitalization rules have been found to decrease tax avoidance behaviour.

G20

• The G20 is a strategic multilateral platform connecting the world’s major developed and emerging economies.
• The G20 holds a strategic role in securing future global economic growth and prosperity.
• Together, the G20 members represent more than 80 percent of world GDP, 75 percent of international trade and 60 percent of the world population.
• Starting in 1999 as a meeting for the finance minister and central bank governors, the G20 has evolved into a yearly summit involving the Head of State and Government. 
  • In addition to that, the Sherpa meetings (in charge of carrying out negotiations and building consensus among Leaders), working groups, and special events are also organized throughout the year.
• The members of the G20 are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. Spain is also invited as a permanent guest.
  • Each year, the Presidency invites guest countries, which take full part in the G20 exercise. 
  • Several international and regional organizations also participate, granting the forum an even broader representation.
•  The G20 has no permanent secretariat.