G20 backs Landmark Global Tax Reform.
Written by crest887fm on July 11, 2021
Finance ministers of the G20 large economies have endorsed a landmark move to stop multinationals shifting profits to low-tax havens.
The ministers at Saturday’s meeting in the Italian city of Venice also acknowledged the need to ensure fair access to vaccines in poorer countries.
The pact would establish a global minimum corporate tax of at least 15 percent to deter multinationals from shopping around for the lowest tax rate.
It would also shift the way that highly profitable multinationals such as Amazon and Google are taxed, basing it partly on where they sell products and services, rather than on the location of their headquarters.
German Finance Minister Olaf Scholz confirmed to reporters that all G20 economies were on board for the pact, while US Treasury Secretary Janet Yellen said a handful of smaller countries still opposed to it, such as low-tax Ireland and Hungary, would be encouraged to sign up by October.
The G20 members account for more than 80 percent of world gross domestic product, 75 percent of global trade and 60 percent of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.
In addition to European Union holdouts Ireland, Estonia and Hungary, other countries that have not signed on include Kenya, Nigeria, Sri Lanka, Barbados and St Vincent and the Grenadines.
Among other sticking points, a fight in the US Congress over President Joe Biden’s planned tax increases on corporations and wealthy Americans could cause problems, as could a separate EU plan for a digital levy on tech companies.
US Treasury officials say the EU plan is not consistent with the wider global deal, even if the levy is largely aimed at European firms.
Italy’s Minister of Economy and Finance Daniele Franco leaves the press conference of the G20 High Level Independent Panel (HLIP) [Andreas Solaro/AFP]
Beyond the tax agreement, the G20 will address concerns that the rise of the fast-spreading Delta coronavirus variant, combined with unequal access to vaccines, pose risks to global economic recovery.