G20 ministers set to approve global tax reform
>>VENICE: Finance ministers from the G20 richest nations resumed discussions in Venice yesterday to give the green light to a historic deal to tax multinational companies more fairly.
The framework for reform, including a minimum global corporate tax rate of 15 percent, was agreed by 131 countries earlier this month and could be in place by 2023.
Hailed by those involved as historic, it aims to prevent a race to the bottom as countries compete to offer the lowest tax rates to attract investment, with many multinationals as a result paying derisory levels of tax.
“This minimum tax on companies must be ambitious,” French Finance Minister Bruno Le Maire said on Friday, adding that the meeting of the G20 — the countries with the 19 biggest economies and the European Union — represented a unique opportunity.
The countries representing 85% of global wealth were seeking a deal “for the 21st century, which will allow for the fair taxation of digital giants which largely escape taxation, which nobody can accept”, he said. Final agreement on the minimum rate is not expected until the run-up to the G20 leaders’ summit in Rome in October.
But the Venice talks are an opportunity to thrash out further details and exert pressure on those who have not yet signed up to the deal, struck under the auspices of the Organisation for Economic Cooperation and Development (OECD) — a club of 38 wealthy economies.
Treasury Secretary Janet Yellen said yesterday that she would work to try to address the concerns of holdout countries that have not signed onto a global corporate tax deal, but added that it wasn’t necessary for all nations to adopt it.
Speaking to reporters alongside German Finance Minister Olaf Scholz, Ms Yellen said she believed that some of the concerns of countries such as Ireland, Estonia and Hungary could be addressed in the run-up to a G20 leaders’ summit in October.
The United States, France and Germany are among several countries pressing for a higher rate, while aid agencies including Oxfam also argue that 15% is too low.
But with some nations opposed even to this — EU member Ireland lured Apple and Google to Dublin with its low tax rates.
“We are really now on the way” to a deal that “will be finalised shortly”, German Finance Minister Olaf Scholz told CNBC television.
The minimum rate is expected to affect fewer than 10,000 major companies.