G20 ministers set to give green light to global tax reform

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The finance ministers of the richest G20 countries are expected to give the green light on Saturday to a historic agreement to tax multinational companies.
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Venice: The finance ministers of the richest countries of the G20 are expected to give the green light on Saturday to a historic agreement aimed at taxing multinational companies more equitably.

The reform framework, including a minimum global corporate tax rate of 15%, was approved by 131 countries earlier this month and could be in place by 2023.

Hailed by those involved as “historic”, it aims to stop the race to the bottom as countries compete to offer the lowest tax rates to attract investment, with many multinational companies paying the levels accordingly. derisory taxation.

“This minimum corporate tax must be ambitious,” French Finance Minister Bruno Le Maire told AFP on Friday, adding that the meeting of the G20 – the 19 richest countries and the European Union – represented an opportunity unique.

Countries representing 85% of the world’s wealth were seeking an agreement “for the 21st century, which will allow fair taxation of digital giants who largely escape taxation, which no one can accept,” he said.

On my way

A final agreement on the minimum rate is not expected until the preparations for the G20 leaders’ summit in Rome in October.

But the Venice talks provide an opportunity to debate new details and put pressure on those who have yet to sign the agreement, concluded under the auspices of the Organization for Economic Co-operation and Development (OECD).

The United States, France and Germany are among several countries asking for a higher rate, while aid agencies, including Oxfam, also argue that 15% is too low.

But with some countries even opposing it – EU member Ireland has lured Apple and Google to Dublin with its low tax rates – the rate is unlikely to change.

“We are now really on the path” to an agreement which “will be finalized shortly,” German Finance Minister Olaf Scholz told CNBC television.

The minimum rate should apply to less than 10,000 large companies, those with an annual turnover of more than 750 million euros.

It is one of the two so-called pillars of global tax reform that have been the subject of negotiations for years and received new impetus under US President Joe Biden.

The other would give countries a share of the taxes on profits there and apply initially to the top 100 companies or so.

It is aimed at tech giants like Google, Amazon, Facebook and Apple, but could also affect companies like energy giant BP, which has operations in 85 countries.

According to a draft obtained by AFP for the final declaration, still under discussion, G20 ministers will “ratify” the “historic OECD agreement on a more stable and fairer international tax architecture”.

U.S. Treasury Secretary Janet Yellen, European Central Bank (ECB) Chief Christine Lagarde and Russian Finance Minister Anton Siluanov were among the attendees at the two-day meeting in Venice, while China and India y attended virtually.

G20 ministers and central bank chiefs are also expected to call for more support for countries hard hit by the coronavirus pandemic.

International Monetary Fund chief Kristalina Georgieva this week urged richer countries to redouble their efforts to help poorer countries withstand the “devastating double blow” of Covid-19 and the resulting economic damage .

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