--- title: "Newsflash: G-7 Reaches BEPS 2.0 International Tax Agreement" description: On June 5, 2021, the G-7 reached an agreement on OECD BEPS 2.0 Pillar One and Pillar Two initiatives, with promise to repeal Digital Services Taxes (DST). image: https://www.valentiam.com/hubfs/G7%20OECD%20BEPS%20Tax%20Reform.jpeg --- [![logo](https://cdn2.hubspot.net/hub/2661279/hubfs/valentiam/images/logo.png?width=332&name=logo.png "logo")](https://www.valentiam.com/) ## Latest NEWS & INSIGHTS # Newsflash: G-7 Reaches BEPS 2.0 International Tax Agreement Posted by Jared Walls on June 7, 2021 On June 4-5, 2021, the G-7 Finance Ministers and Central Bank Governors convened in London, together with representatives of the World Bank, IMF, OECD, and Eurogroup. The wide-ranging meeting agenda covered several topics, from Covid-19 and climate change to central bank digital currencies and international tax reform. In a post-meeting [press conference](https://home.treasury.gov/news/press-releases/jy0216), US Treasury Secretary, Janet Yellen, announced that the G-7 reached a consensus on a proposed international tax framework for Pillar One (reallocation of taxing rights) and Pillar Two (global minimum tax). Secretary Yellen hailed the meeting as “an historic achievement,” noting that a global minimum tax would end harmful competition among tax administrations in a “race to the bottom” on corporate tax rates. Following the conclusion of the meetings on June 5, the G-7 Finance Ministers and Central Bank Governors released a [communiqué](https://home.treasury.gov/news/press-releases/jy0215) outlining the details of the accord. **What Was Agreed** For Pillar One, the G-7 committed to the reallocation of taxing rights to market jurisdictions based on economic presence. For approximately 100 of the world’s largest and profitable companies, at least 20 percent of global residual profits, above a 10 percent margin threshold, would be attributed to the jurisdictions in which the products and services are consumed. For the Pillar Two controlled foreign corporation (CFC) rules, the G-7 agreed to advocate for a global minimum corporate tax rate of *at least* 15 percent. The G-7 agreement would apply the Global Ant-Base Erosion (GloBe) minimum tax on a country-by-country basis. The G-7 agreement also calls for coordination between the OECD tax reform plan and the removal of all Digital Services Taxes (DSTs) and similar measures. **What Wasn’t Agreed** Although the G-7 accord is a significant step toward a global agreement, the outcome of the meetings was a relatively brief statement, with just a single paragraph dedicated to international tax. Several key questions remain. - What will be the revenue threshold for Pillar One and how will it be defined? - Which entities will make Pillar One balancing payments to the market jurisdictions and under what mechanism? - What is the future of Amount B? - Would a country-by-country Pillar Two proposal allow for a substance-based carveout similar to the 10 percent return on tangible assets in the current US system? - Will the G-7 commit to blocking the proposed EU Digital Levy as a precondition for an agreement? - When and how will unilateral DSTs be repealed, including those implemented by G-7 nations? - What is the G7 position on tax certainty, including mandatory, binding dispute resolution? **What’s Next** As the G-7 seeks to secure the endorsement of its proposal by the global community, the first formal test will come at the G-20 Finance Ministers and Central Bank Governors’ meeting in Venice on July 9-10, 2021.  If an agreement is reached in that forum, it will represent more than 80 percent of global GDP.  By starting with an agreement among a likeminded group of the largest and most developed economies, the G-7 is creating a sense of momentum behind its proposal.  However, the OECD Inclusive Framework on BEPS comprises 139 countries and jurisdictions, many of which have diverging interests and views on taxation.  It remains to be seen if smaller and developing nations will be willing to accept an agreement that restricts their ability to use taxation as a lever to attract foreign inbound investment.   *About the Author:* [Jared Walls](https://www.valentiam.com/our-team/jared-walls) is a Valentiam Group partner based in Los Angeles.  Jared also co-leads the [WTS Global Transfer Pricing Service Line](https://wts.com/global/services/transfer-pricing-valuation-services) and is a member of the [WTS Global Board of Directors](https://wts.com/global/wts-global/global-board). Topics: [Transfer pricing](https://www.valentiam.com/newsandinsights/tag/transfer-pricing), [Pillar One](https://www.valentiam.com/newsandinsights/tag/pillar-one), [OECD](https://www.valentiam.com/newsandinsights/tag/oecd), [Pillar Two](https://www.valentiam.com/newsandinsights/tag/pillar-two), [Digital Services Tax](https://www.valentiam.com/newsandinsights/tag/digital-services-tax) ### Related Posts ### [Fred Johnson Joins Valentiam Group as Partner and Dispute Resolution Practice Leader](https://www.valentiam.com/newsandinsights/fred-johnson-joins-valentiam) We are pleased to announce the addition of Fred Johnson as a partner at Valentiam Group. [Read More](https://www.valentiam.com/newsandinsights/fred-johnson-joins-valentiam) ### [Dr. Stephen Blough Joins Valentiam Group as Partner](https://www.valentiam.com/newsandinsights/steve-blough-joins-valentiam) We are pleased to announce the addition of Dr. Stephen Blough as a partner in the firm. 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