Ministerial Meeting 2018: Addressing new economic and financial challenges and opportunities through multilateralism

Item 4 - Addressing new economic and financial challenges and opportunities through multilateralism: integrity in global flows, international taxation and the digital economy

Wednesday 30 May 2018 - 17:50

Breakout group 1 – The challenges of international taxation

It is of fundamental importance to examine the effects of the digitalisation of the economy on the international tax system. Both fiscal equity, which is vital for public confidence, economic actors and governments, and the risk of tax base erosion mean that it is essential to find constructive solutions to the tax challenges associated with a modern economy impacted by digitalisation through a multilateral consensus approach.

The breakout group discussed the following:

How can governments best work towards a consensus-based and multilateral approach for a long-term solution to the tax challenges associated with a modern economy impacted by digitalisation?
How can governments best ensure that countries continue to make progress in implementing the BEPS and transparency standards, including both for automatic exchange of information and exchange of information on request?
How can the OECD best foster the continued development of the new inclusive institutional framework for international taxation represented by the BEPS Inclusive Framework and the Global Forum on Transparency and Exchange of Information for Tax Purposes?

Breakout group 2 – The digital transformation of the economy

Even though the digital transformation can open markets to new actors and offers a wealth of opportunities to make progress, it also introduces the possible risk of restricting competition in particular through concentration thanks to new market dynamics created by economies of scale in this industry, and dominance acquired through collection of data and control of access to it. These trends may give rise to new situations regarding maintaining competition.

The digital transformation also continues to raise the question of consumer protection issues relating to digital technologies and business models. It also offers opportunity for social dialogue to contribute to foster quality jobs, decent work, increased productivity and more inclusive growth in the context of the digital transformation.

Blockchain is a general-purpose technology with multiple uses across many industries and within the wider digital economy. Furthermore, while the expansion of applications using blockchain technology, including but not limited to crypto assets, is fuelling innovation and opportunity such as efficiency gains and secure transactions, access to certain new services, access to financing and growing opportunities, the potential risks in terms of consumer protection, market integrity, cross-border capital flows and taxation should be analysed.

Last, the roles and responsibilities of public and private actors in relation to digital security and questions of collective well-being related to the sharing and use of data and to the protection of the rights and interests of people and organisations (especially the protection of private life and personal data, security and intellectual property) should be addressed.

The breakout group discussed the following:

How can we increase international co-operation over data use, and blockchain technology?
How can stakeholders seek fair international competition in the digital domain?
How can social dialogue best contribute to meet the digital transformation?

Breakout group 3 – Increasing the integrity of global flows

There are countless advantages to the mesh of global interconnections, but it also makes cross-border criminal activities both easier to conduct and harder to detect.

Concerning illicit finance, a lot of work has already been done to increase transparency by putting an end to banking secrecy for tax purposes and by promoting co-operation between tax authorities. The Oslo Dialogue launched by the OECD in 2011 promotes an integrated governmental approach to tax offences and other financial crimes, and the Forum on Tax Administration is examining the opportunities provided by new digital technologies to combat the informal economy. The OECD's due diligence guidelines on supply chains, especially in such sectors as minerals, also offer a means of promoting integrity.

Illicit trade—such as the trafficking of humans and wildlife, and the smuggling of illegal drugs, counterfeit pharmaceuticals, tobacco and alcohol—affects people's lives and public safety in many ways, and also holds back innovation, dampens employment and reduces tax revenues. It is estimated that the global return on organised crime could reach as high as 1.5% of worldwide GDP. The OECD's Task Force on Countering Illicit Trade has begun looking into potential common solutions, including advice on counteracting illicit trade in free trade zones.

Last, the threat of malicious cyber activity and cyber incidents undermines the potential benefits of the digital transformation and the global financial system and exposes people, firms and governments to a wide range of risks, including the extortion of money, sabotage and the disruption of industrial output, reputational damage, the theft of identity and goods as well as risks to personal safety and security. Since the early 1990s, the OECD has been working on the challenges of digital security, but faced with the growing severity of incidents international efforts need to be stepped up. The recent creation of the OECD Global Forum on Digital Security for Prosperity is a step forward which, by engaging with stakeholders, Member and Partners, will make it possible to improve the sharing of information on this subject, encourage risk mitigation, including via the design of less vulnerable products, enhance skills in this area, and, ultimately, propose mutually-agreed solutions in this regard.

The breakout group discussed the following:

How can international co-operation be moved forward to combat illicit financial flows, malicious cyber activities and illicit trade?
How can the international organisations increase cooperation and accelerate progress in this field?

DOCUMENT

Key Issues Paper
For reference: C/MIN(2018)2
Going Digital in a Multilateral World - An interim report to Ministers
For reference: C/MIN(2018)6