G20 finance chiefs in Venice support global tax deal: draft
Communiqué looks to shore up more support
• Finance ministers representing the G20 large economies back a deal setting a global floor for corporate tax rates and will push to resolve outstanding issues on it by October, the latest draft of a joint communiqué said.
The communiqué, a copy of which was seen by Reuters, urged any holdout nations to join the deal. Two sources said the statement was expected to be released without changes at their meeting in the Italian city of Venice due to be wrapped up on Saturday.
“We call on (countries involved in the global talks) to swiftly address the remaining issues and finalize the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by our next meeting in October,” the statement said.
“We invite all members (involved in the discussion) that have not yet joined the international agreement to do so.”
The statement, if approved, represents political endorsement of an agreement this month among 131 countries, at talks hosted by the Paris-based Organisation for Economic Cooperation and Development, on taxation of multinationals’ profits and setting a global minimum corporate tax rate of at least 15 per cent.
The aim is to have G20 leaders give it final blessing at an October summit in Rome. If all goes to plan, the new tax rules should be translated into binding legislation worldwide before the end of 2023. However a fight in the U.S. Congress over President Joe Biden’s proposed tax increases on corporations and wealthy Americans could yet create hurdles.
Equally, there could be difficulties because European Union member states Ireland, Estonia and Hungary are among the countries that have not yet signed up to the deal.
“I am convinced that in the end we will come to a joint decision in the EU,” German Finance Minister Olaf Scholz told radio station DLF before heading to the talks.
The meeting of G20 finance ministers and central bankers in Venice is their first face-to-face encounter since the start of the COVID-19 pandemic.
The G20 members account for more than 80 per cent of world gross domestic product, 75 per cent of global trade and 60 per cent of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.
In an addition to earlier drafts, the communiqué said the support measures put in place by wealthier countries to shield their economies from the ravages of the pandemic must be in line with central bank commitments to keep inflation stable.
“We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while remaining consistent with central bank mandates — including on price stability,” it read.
Concerns have been rising recently that ultra-loose monetary policy in many countries following the pandemic could unleash a surge in inflation, possibly testing major central banks’ commitment to maintain stable prices.
The statement also urged faster distribution of COVID-19 vaccines, drugs and tests across the world, but made no new commitments to that end, and called on the International Monetary Fund to come up with ways for countries to steer IMF resources towards needier nations.
The IMF wants G20 countries to decide on a clear path over the next two days for allowing rich countries to contribute some US$100 billion worth of newly issued IMF reserves to poorer countries, the Fund’s No. 2 official told Reuters on Friday.
IMF First Deputy Managing Director Geoffrey Okamoto said his goal was to be able to present a viable option for channelling newly issued Special Drawing Rights to countries in need by the time the US$650 billion allocation is completed at the end of August.
“Countries expect us to have an option ready to go. We’re doing all we can to secure agreement on an option that we can begin implementing once the allocation is made,” Okamoto said.
The IMF SDR plan will distribute reserves to all 190 member countries in proportion to their ownership, with the lion’s share going to G20 countries. SDRS are the IMF’S unit of exchange, made up of dollars, euros, yen, sterling and yuan. To spend them, countries must arrange an exchange for underlying currencies.
WE INVITE ALL MEMBERS THAT HAVE NOT YET JOINED ... TO DO SO.