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OECD: Tax and fiscal policies in response to COVID-19 pandemic

OECD: Tax and fiscal policies in response to COVID-19

The Organisation for Economic Cooperation and Development (OECD) today, in connection with a webcast, issued a release noting that “with global economic activity facing a historic drop and government spending rising dramatically,” the implications of the coronavirus (COVID-19) pandemic on public finances and tax revenues are significant.

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The release notes that the OECD is deploying its data gathering and analytical capacities to help governments face these challenges while supporting businesses and people towards economic recovery.

The OECD noted that:

  • Governments are taking multifaceted actions to support their citizens and businesses and to maintain the provision of vital public services, often putting new and unforeseen pressure on public finances.
  • The OECD is providing critical advice on a range of tax topics while using its large tax co-operation network to facilitate collaboration among all countries.
  • A recent report examined emergency tax and fiscal policy measures introduced by countries in response to the COVID-19 crisis, and noted 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 the tax relief items are measures being taken 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 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 has issued guidance on these issues per member countries’ request.

The OECD also reported that multilateral efforts to address the tax challenges arising from digitalisation of the economy continue. Delegates from the Inclusive Framework on BEPS continue working towards a G20 mandate of reaching a multilateral, consensus-based solution by year-end, and 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. 

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