The chief financial officers of the major G20 economies on Saturday approved a landmark move to prevent multinationals from shifting profits to low-tax tax havens, where they will also warn that variants of the coronavirus threaten the global economic recovery.
They also recognized the need to ensure equitable access to vaccines in the poorest countries. But a draft communiquÃ© to be approved at the meeting in the Italian city of Venice did not contain new specific proposals on how to proceed.
The tax deal was to be the biggest new political initiative to emerge from their talks. He is crowning eight years of wrangling over the tax issue and the goal is for national leaders to give him one final blessing at a G20 summit in October in Rome.
The pact would establish a global minimum corporate tax of at least 15 percent to deter multinationals from seeking the lowest tax rate.
It would also change the way highly profitable multinationals such as Amazon and Google are taxed, based in part on where they sell products and services, rather than the location of their headquarters.
German Finance Minister Olaf Scholz confirmed to reporters that all G20 economies agreed to the pact, while US Treasury Secretary Janet Yellen said a handful of small countries still opposed, like Ireland and Hungary with low tax rates, would be encouraged to sign up. until October.
“We will try to do this, but I must stress that it is not essential that every country is on board,” she said.
“This agreement contains a kind of enforcement mechanism that can be used to ensure that recalcitrant countries are not in a position to undermine – to use tax havens that undermine the functioning of this global agreement.”
G20 members represent over 80% of the world’s gross domestic product, 75% of world trade and 60% of the planet’s population, including the United States, Japan, Britain, France, Germany and India. .
In addition to Ireland, Estonia and Hungary, recalcitrant countries of the European Union, the other countries which have not signed are Kenya, Nigeria, Sri Lanka, Barbados and Saint Vincent -and the Grenadines.
Among other sticking points, a fight in the US Congress over President Joe Biden’s planned tax increases on businesses and wealthy Americans could cause problems, as could a separate European plan for a digital tax on businesses. technological.
U.S. Treasury officials say the EU plan is inconsistent with the broader global deal, even though the tax largely targets European businesses.
Beyond the tax deal, the G20 will address concerns that the rise of the rapidly spreading variant of the Delta coronavirus, combined with uneven access to vaccines, poses risks to the global economic recovery.
Citing improvements in the global outlook so far, the project adds: “However, the recovery is characterized by large divergences between and within countries and remains exposed to downside risks, especially the spread of new variants. of the Covid-19 virus and different rates of vaccination. “
A Reuters tally of new Covid-19 infections shows they are increasing in 69 countries, with the daily rate pointing upwards since the end of June and now reaching 478,000.
“We all need to improve our vaccine performance all over the world,” French Finance Minister Bruno Le Marie told reporters. “We have a very good economic forecast for the G20 economies and the only obstacle on the way to a quick and strong economic rebound is the risk of having a new wave.”
IMF Managing Director Kristalina Georgieva said the world was facing “a worsening two-speed recovery” in part because of differences in vaccine availability.
âThis is a critical moment that calls for urgent action by the G20 and policy makers around the world,â she said in a call ahead of the meeting.
The statement, while stressing support for the “equitable global sharing” of vaccines, did not propose new concrete measures, simply acknowledging a recommendation of $ 50 billion (â¬ 42 billion) in funding for new vaccines by the government. IMF, World Bank, World Health Organization and World Health Organization. Commercial organization.
The IMF is also pushing the G20 countries to decide on a clear path for rich countries to contribute some 100 billion dollars (84 billion euros) of newly issued IMF reserves to the poorest countries.
IMF’s first deputy managing director Geoffrey Okamoto told Reuters his goal was to be able to present a viable option for channeling the newly issued Special Drawing Rights to countries in need until a new allocation. of 650 billion dollars (547 billion euros) to be completed by the end of August.